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MEANING
Monetary policy is an economic policy that
manages the size and growth rate of the
money supply in an economy. It is a powerful
tool to regulate macroeconomic variables such
as inflation and unemployment
OR
Monetary policy refers to the credit control
measures adopted by the central bank of a
country.
Objectives or Goals
1. Full Employment
2. Price Stability
3. Economic Growth
4. Balance of Payments
5. Inflation
6. Currency exchange rates
Instruments
•Quantitive Instrument
• Bank Rate
• Open Market Operations
• Change in Cash reserve ratio
• Change in Selective Credit Controls
Qualitative Instruments
Rationing of credit
Regulation of consumer credit
Direct action
Moral suasion
Limitations in less developed countries
Large non monetized Sector
 Undeveloped Money and Capital Markets
o Large Number of NBFLs
 High Liquidity
Foreign Banks
Small Bank Money
• Money not deposited with Banks
Monetary Policy
Monetary Policy

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Monetary Policy

  • 1.
  • 2. MEANING Monetary policy is an economic policy that manages the size and growth rate of the money supply in an economy. It is a powerful tool to regulate macroeconomic variables such as inflation and unemployment OR Monetary policy refers to the credit control measures adopted by the central bank of a country.
  • 3. Objectives or Goals 1. Full Employment 2. Price Stability 3. Economic Growth 4. Balance of Payments 5. Inflation 6. Currency exchange rates
  • 4. Instruments •Quantitive Instrument • Bank Rate • Open Market Operations • Change in Cash reserve ratio • Change in Selective Credit Controls
  • 5. Qualitative Instruments Rationing of credit Regulation of consumer credit Direct action Moral suasion
  • 6. Limitations in less developed countries Large non monetized Sector  Undeveloped Money and Capital Markets o Large Number of NBFLs  High Liquidity Foreign Banks Small Bank Money • Money not deposited with Banks