Understanding Monetary Policy and its Components
What is Monetary Policy ? Monetary policy, managed by a country's central bank, plays a crucial role in shaping a nation's economic landscape. It involves the strategic management of money supply and interest rates, influencing critical variables such as inflation, consumption, savings, investment, and capital formation. In India, the Reserve Bank of India (RBI) holds the responsibility for formulating and executing monetary policy, employing a range of tools like interest rate adjustments and bank reserve requirement modifications to achieve specific economic objectives and foster desired outcomes. Objectives of Monetary Policy : Control inflation within tolerable range, and ensure that purchasing power of the currency remains stable, creating conducive environment for consumers and business. promote economic growth and development in a country by fostering an environment that encourages investment and consumption. Contribute to employment generation and manage flu