A shortage of money supply will retard growth while … What is dear money policy or contractionary monetary policy? Call money rate is the operating target of monetary policy. Its other goals are said to include maintaining balance in exchange rates, addressing unemployment problems and most importantly stabilizing the economy. An imbalance between the two will be reflected in the price level. This document is highly rated by UPSC … Credit and Monetary policy is the macroeconomic policy laid down by the central bank. Monetary policy refers all those operations, which are used to control the money supply in the economy. Liquidity Adjustment Facility (LAF): LAF was introduced in June 2000. Monetary policy refers to the Central Bank`s policy – that is, the Reserve Bank of India – on interest rates, currency and credit availability. The corridor structure for the policy rate is a helping guide for the RBI to design its monetary policy operations. 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. Nov 25, 2020 - 4. 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. 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. The LAF is the key element in the monetary policy operating framework of the RBI. 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. A Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions. 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 … The Monetary Policy Committee of the Reserve Bank of India met on 7th, 8th and 9th October for its third meeting of 2020-21. As money supply decreases in the economy, i.e. 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. contraction in money supply, it is also known as contractionary monetary policy. Monetary Policies, Indian Economy, Civil Services Exam UPSC Notes | EduRev is made by best teachers of UPSC. GK, General Studies, Optional notes for UPSC, IAS, Banking, Civil Services. 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