Bank English – Test 2

Read the following passages carefully and answer the questions given below them. Certain words are given in bold so that you can locate them while answering some of the questions. Even before the demonetisation effect plays out fully, the Reserve Bank of India has cut growth estimates for the economy to 7.1% from 7.6% earlier. It cited a slowdown in the second quarter (July-September) but underplayed the impact of the radical currency change. Surprisingly, the RBI's monetary policy panel, which decides interest rates, shunned a growth booster by holding rates, pointing to steady food prices and risks of rising oil prices. The BSE Sensex fell 156 points, reversing a two-day trend, and yield on the benchmark 10-year bond shot up by 20 basis points to 6.40%. However, banks remain confident that loans will get cheaper after the RBI decided to release funds locked by way of an incremental cash reserve requirement. Before the policy, most bankers and economists were almost unanimous in their view that RBI would cut rates in its bi-monthly review. "The decision to keep the repo rate unchanged was a little surprising given that there has been sizeable demand destruction, said Arundhati Bhattacharya, chairman, State Bank of India. The central bank, however, downplayed the impact of demand contraction following demonetisation. It said that the impact on GDP growth would at worst be 15 basis points, adding that it was only a temporary phenomenon. The growth estimates are down because of the Q2 revision which is in the past. The withdrawal of specified bank notes is also factored in but that is only about 15 basis points and we regard that as a very transitory phenomenon and monetary policy should not be reacting to transitory phenomenon. RBI governor Urjit Patel too strongly defended demonetisation. The motivation for the decision was to deal with the problem of high-quality counterfeit notes and unearth black money that may be held in cash. The decision was not taken in haste but after detailed deliberations, he said. RBI governor Urjit Patel too strongly defended demonetisation. Highlighting the benefits of the move that continues to affect people across the country, Patel said the security of new notes had been enhanced. "We will have more transparency. In term of fiscal and tax compliance, we will be at a better place and public finances could improve. A very important collateral benefit is the thrust on digitisation taking place, he added. On inflation, Patel said that prices were sticky. "CPI inflation, excluding food and fuel, has been resistant to downward impulses and could set a floor to headline inflation. With the OPEC's agreement to cut production, crude prices may firm up in the coming months. Global developments, especially as financial markets factor in the future stance of US monetary and fiscal policy, could impart volatility to the exchange rate, thereby feeding into inflation", said the RBI governor.

What is the main reason given by the RBI behind cutting down growth estimates?

Read the following passages carefully and answer the questions given below them. Certain words are given in bold so that you can locate them while answering some of the questions. Even before the demonetisation effect plays out fully, the Reserve Bank of India has cut growth estimates for the economy to 7.1% from 7.6% earlier. It cited a slowdown in the second quarter (July-September) but underplayed the impact of the radical currency change. Surprisingly, the RBI's monetary policy panel, which decides interest rates, shunned a growth booster by holding rates, pointing to steady food prices and risks of rising oil prices. The BSE Sensex fell 156 points, reversing a two-day trend, and yield on the benchmark 10-year bond shot up by 20 basis points to 6.40%. However, banks remain confident that loans will get cheaper after the RBI decided to release funds locked by way of an incremental cash reserve requirement. Before the policy, most bankers and economists were almost unanimous in their view that RBI would cut rates in its bi-monthly review. "The decision to keep the repo rate unchanged was a little surprising given that there has been sizeable demand destruction, said Arundhati Bhattacharya, chairman, State Bank of India. The central bank, however, downplayed the impact of demand contraction following demonetisation. It said that the impact on GDP growth would at worst be 15 basis points, adding that it was only a temporary phenomenon. The growth estimates are down because of the Q2 revision which is in the past. The withdrawal of specified bank notes is also factored in but that is only about 15 basis points and we regard that as a very transitory phenomenon and monetary policy should not be reacting to transitory phenomenon. RBI governor Urjit Patel too strongly defended demonetisation. The motivation for the decision was to deal with the problem of high-quality counterfeit notes and unearth black money that may be held in cash. The decision was not taken in haste but after detailed deliberations, he said. RBI governor Urjit Patel too strongly defended demonetisation. Highlighting the benefits of the move that continues to affect people across the country, Patel said the security of new notes had been enhanced. "We will have more transparency. In term of fiscal and tax compliance, we will be at a better place and public finances could improve. A very important collateral benefit is the thrust on digitisation taking place, he added. On inflation, Patel said that prices were sticky. "CPI inflation, excluding food and fuel, has been resistant to downward impulses and could set a floor to headline inflation. With the OPEC's agreement to cut production, crude prices may firm up in the coming months. Global developments, especially as financial markets factor in the future stance of US monetary and fiscal policy, could impart volatility to the exchange rate, thereby feeding into inflation", said the RBI governor.

Which of the following is called as the transitory phenomenon?

Read the following passages carefully and answer the questions given below them. Certain words are given in bold so that you can locate them while answering some of the questions. Even before the demonetisation effect plays out fully, the Reserve Bank of India has cut growth estimates for the economy to 7.1% from 7.6% earlier. It cited a slowdown in the second quarter (July-September) but underplayed the impact of the radical currency change. Surprisingly, the RBI's monetary policy panel, which decides interest rates, shunned a growth booster by holding rates, pointing to steady food prices and risks of rising oil prices. The BSE Sensex fell 156 points, reversing a two-day trend, and yield on the benchmark 10-year bond shot up by 20 basis points to 6.40%. However, banks remain confident that loans will get cheaper after the RBI decided to release funds locked by way of an incremental cash reserve requirement. Before the policy, most bankers and economists were almost unanimous in their view that RBI would cut rates in its bi-monthly review. "The decision to keep the repo rate unchanged was a little surprising given that there has been sizeable demand destruction, said Arundhati Bhattacharya, chairman, State Bank of India. The central bank, however, downplayed the impact of demand contraction following demonetisation. It said that the impact on GDP growth would at worst be 15 basis points, adding that it was only a temporary phenomenon. The growth estimates are down because of the Q2 revision which is in the past. The withdrawal of specified bank notes is also factored in but that is only about 15 basis points and we regard that as a very transitory phenomenon and monetary policy should not be reacting to transitory phenomenon. RBI governor Urjit Patel too strongly defended demonetisation. The motivation for the decision was to deal with the problem of high-quality counterfeit notes and unearth black money that may be held in cash. The decision was not taken in haste but after detailed deliberations, he said. RBI governor Urjit Patel too strongly defended demonetisation. Highlighting the benefits of the move that continues to affect people across the country, Patel said the security of new notes had been enhanced. "We will have more transparency. In term of fiscal and tax compliance, we will be at a better place and public finances could improve. A very important collateral benefit is the thrust on digitisation taking place, he added. On inflation, Patel said that prices were sticky. "CPI inflation, excluding food and fuel, has been resistant to downward impulses and could set a floor to headline inflation. With the OPEC's agreement to cut production, crude prices may firm up in the coming months. Global developments, especially as financial markets factor in the future stance of US monetary and fiscal policy, could impart volatility to the exchange rate, thereby feeding into inflation", said the RBI governor.

Which of the following statement(s) is / are TRUE in the context of the passage? I. RBI has decreased the growth forecast for the economy by 50 basis points. II. RBI said that there is a little impact of demonetization on slowing down of the economy. III. Food and fuel price may raise CPI inflation.