Question

Write down the major instruments of monetary policy?

26 Apr 2025
Answer :
Word Count : 665

Monetary policy refers to the actions taken by the central bank of a country to manage the money supply and interest rates to achieve economic objectives like controlling inflation, stabilizing currency, and fostering conditions for economic growth. In India, the Reserve Bank of India (RBI) is responsible for formulating and implementing monetary policy. The major instruments of monetary policy used by the RBI are:

1. Repo Rate:
   The repo rate is the rate at which commercial banks borrow money from the RBI for short-term loans, typically for a period of overnight or up to two weeks. When the RBI wants to increase liquidity in the economy, it lowers the repo rate, making borrowing cheaper for commercial banks. On the other hand, raising the repo rate makes borrowing more expensive, which helps _________ ________ __________ ____ _______ __________ ___.
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