Monetary policy is used to influence the level of economic activity in the country, by changing the money supply and interest rates.
What is Monetary policy?
The central bank's macroeconomic policy is known as monetary policy. It is a demand-side economic strategy used by a nation's government to achieve macroeconomic goals like inflation, consumption, growth, and liquidity. It involves managing the money supply and interest rate.
The Reserve Bank of India's monetary policy in India aims to manage the amount of money in order to cater the requirements of various economic sectors and quicken the rate of economic growth. The RBI uses a variety of tools to carry out monetary policy, including open market operations, fed funds rate policy, reserve system, credit control policy, and moral persuasion.
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