Monetary Policy

Posted in Finance, Accounting and Economics Terms, Total Reads: 1147
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Definition: Monetary Policy

Monetary policy is the policy of controlling the money supply in the economy by changing the interest rates prevailing in the economy.

It is used generally to control inflation, at times of boom and recession; it is used to change the money supply in the economy. The instruments in monetary policy include:

  1. Bank rate.
  2. Repo rate.
  3. Reverse repo rate.
  4. Cash reserve ratio.
  5. Statutory liquidity ratio etc.

 

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