A monetary policy is a process undertaken by the government, central bank or currency board to control the availability and supply of money, as well as the amount of bank reserves and loan interest rates. The overall objective of the monetary policy is twofold: To maint. Liquidity Adjustment Facility (LAF): LAF was introduced in June 2000. What is dear money policy or contractionary monetary policy? Monetary policy refers to the Central Bank`s policy – that is, the Reserve Bank of India – on interest rates, currency and credit availability. A shortage of money supply will retard growth while … Monetary Policies, Indian Economy, Civil Services Exam UPSC Notes | EduRev is made by best teachers of UPSC. A Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions. Monetary policy is an important instrument for achieving price stability k brings a proper adjustment between the demand for and supply of money. Money becomes costlier when interest rate rises and when RBI makes money to become costlier or dearer, it is said to be following dear money policy. Credit policy is a part of monetary policy as it deals with how much and at what rate credit is advanced by banks. Its other goals are said to include maintaining balance in exchange rates, addressing unemployment problems and most importantly stabilizing the economy. This document is highly rated by UPSC … contraction in money supply, it is also known as contractionary monetary policy. The Monetary Policy Committee of the Reserve Bank of India met on 7th, 8th and 9th October for its third meeting of 2020-21. Credit and Monetary policy is the macroeconomic policy laid down by the central bank. The LAF is the key element in the monetary policy operating framework of the RBI. The Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. As per the monetary policy of the RBI, ideally, the call rate should travel within the corridor showing a comfortable liquidity situation in the financial system and economy. An imbalance between the two will be reflected in the price level. It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like … Nov 25, 2020 - 4. The corridor structure for the policy rate is a helping guide for the RBI to design its monetary policy operations. Monetary policy the use by central bank of interest rate and other instruments to influence money supply to achieve certain macro economics goals is known as monetary policy. GK, General Studies, Optional notes for UPSC, IAS, Banking, Civil Services. 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