What Is Monetary Policy?

Business & Management
#1

The demand side of economic policy is monetary policy, which refers to the measures done by a country’s central bank to manage the money supply and accomplish macroeconomic goals that encourage long-term economic growth.
The central bank, currency board, or other competent monetary authority of a country controls the quantity of money in an economy and the channels through which new money is supplied. Monetary policy is the process of drafting, announcing, and implementing the plan of actions taken by the central bank, currency board, or other competent monetary authority of a country that controls the quantity of money in an economy and the channels through which new money is supplied.
Monetary policy is the control of the money supply and interest rates with the goal of achieving macroeconomic goals such as inflation, consumption, growth, and liquidity. This is accomplished by activities such as altering the interest rate, purchasing or selling government bonds, controlling foreign exchange prices, and increasing the amount of money banks must have in reserve.
Economists, analysts, investors, and financial professionals all around the world anticipate monetary policy reports and the outcomes of meetings involving monetary policy decision-makers with bated breath. Such events have a long-term influence on the economy as a whole, as well as individual industries or marketplaces.

#2

Monetary policy refers to a policy through which a central bank of a country ( In India RBI, in USA Federal Reserve and Bank of England in the U.K.) controls the money supply, provides availability of money, control of credit, control of inflation, control rate of interest, Checking seigniorage effect in an economy. Through which it attains a goal of economic growth and economic stability.

The objective of monetary policy.

  1. Price Stability
  2. Controlling of the monetary base and its money multiplier and credit creation effect
  3. Neutrality of money
  4. To attain Full employment
  5. Economic Growth
  6. Exchange Stability
  7. Reduction in economic inequality.