Question

Identify and discuss the economic issue indicated in the above text.

Hint:

RBI playes a significant role in setting lending rates and keeping the benchmark of the rates.

Answer 1

Identifying the Economic Issue:
The economic issue highlighted in the text is monetary policy and interest rate regulatio by the Reserve Bank of India (RBI).
Discussion:
- The RBI uses monetary policy to control inflation and stabilize the economy.
- The phrase "withdrawal of accommodating monetary policy" indicates that the RBI is focusing on tightening liquidity to curb inflationary pressures.
- By keeping the benchmark lending rate unchanged at 6.5 percent, the RBI aims to balance economic growth and inflation control.
Conclusion:
The decision to maintain the interest rate reflects the central bank's stance on ensuring economic stability while preventing excessive inflation.