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Monetary policy- Objectives, Types, Instruments

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Monetary policy refers to a central bank's actions to control the supply, cost and use of money and credit in an economy. The document outlines that monetary policy aims to achieve objectives like full employment, price stability and economic growth through instruments like interest rates. It discusses different types of monetary policies and notes drawbacks can include time lags in impact and challenges in forecasting. The current scenario in India is mentioned, with repo and reverse repo rates recently reduced.

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MONETARY POLICY PANCHAMI G
What is monetary policy? ≒Central banks policy pertaining to the control of availability, cost and use of money and credit with the help of monetary measures to achieve specific goals. Prof. Wrightsman
Objectives of Monetary Policy Full employment Price stability Economic growth Balance of payments Exchange rate stability Equal income distribution Promotion of savings and investment
Types of Monetary Policy Expansionary Monetary Policy Contractionary Monetary Policy Counter-cyclical Monetary Policy Rule based monetary policy Discretionary monetary policy
Instruments of Monetary Policy
Drawbacks of Monetary Policy Time lags Problem of forecasting Role of non banking financial intermediaries Discrimination
Current scenario Repo rate :5.75 per cent (down from 6.00 per cent) Reverse repo rate has been reduced to 5.50 per cent (from 5.75 per cent). Current Interest Rate (%): 8.6
Monetary policy- Objectives, Types, Instruments
Monetary policy- Objectives, Types, Instruments
Conclusion: Monetary policy is not successful in: Recession. It is successful in inflationary period.
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Monetary policy- Objectives, Types, Instruments

  • 2. What is monetary policy? ≒Central banks policy pertaining to the control of availability, cost and use of money and credit with the help of monetary measures to achieve specific goals. Prof. Wrightsman
  • 3. Objectives of Monetary Policy Full employment Price stability Economic growth Balance of payments Exchange rate stability Equal income distribution Promotion of savings and investment
  • 4. Types of Monetary Policy Expansionary Monetary Policy Contractionary Monetary Policy Counter-cyclical Monetary Policy Rule based monetary policy Discretionary monetary policy
  • 6. Drawbacks of Monetary Policy Time lags Problem of forecasting Role of non banking financial intermediaries Discrimination
  • 7. Current scenario Repo rate :5.75 per cent (down from 6.00 per cent) Reverse repo rate has been reduced to 5.50 per cent (from 5.75 per cent). Current Interest Rate (%): 8.6
  • 10. Conclusion: Monetary policy is not successful in: Recession. It is successful in inflationary period.