Monetary Policy of Reserve Bank of India - Summary
The monetary policy of the Reserve Bank of India plays a vital role in shaping our economy by controlling the money supply through adjustments in interest rates. This is done to maintain price stability and encourage high economic growth. Understanding the monetary policy is key to knowing how the economy functions and how the Reserve Bank of India impacts our everyday lives.
What is Monetary Policy?
Monetary policy refers to the strategies and actions taken by the Reserve Bank of India (RBI) to control the money supply in the country. By adjusting interest rates, the RBI can either promote spending by making loans cheaper or slow down the economy by raising rates. These choices directly influence how easy or difficult it is for people and businesses to borrow money.
Goals of Monetary Policy
The primary goals of the monetary policy are to ensure price stability and promote economic growth. A stable price level means that the cost of living remains steady, which is essential for everyone. When the RBI fosters economic growth, it helps create jobs and improves the living standards of people throughout India.
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