In the context of monetary policy implementation, the 'Corridor System' refers to:
A. The arrangement in which the policy rate is kept within a standing-facility corridor defined by the lending and deposit rates of the central bank
B. Only the range of fiscal targets
C. Only the range of inflation targets
D. The absence of any standing facilities
Answer: Option A
Solution (By JKSSB Mock Tests)
In a corridor system the central bank’s overnight lending rate and deposit rate form a corridor within which the interbank rate fluctuates; open-market operations keep the market rate near the centre of the corridor.
No comments yet. Be the first to start the discussion!