What is monetary Policy?
Monetary policy is the process by which the monetary authority of a country controls the supply of money and interest rates in order to maintain price stability and achieve high economic growth rate and to stabilize inflation.
Objectives of Monetary Policy:
- To control inflation.
- Controlled expansion of bank credit.
- Desired distribution of credit
- Maintain control over finacial system
- Promotion of exports.
Operations of Monetary Policy:
- CRR, SLR, Bank Rate , Repo Rate, Reverse Repo Rate are managed by monetory authority.
- Open market operations such as buying and selling of govt. securities.
- Credit Ceiling: RBI issues prior information to the commercial banks to give loans upto certain limit.