Macro-Economics "Monetary Policy"

"Monetary policy is the process by which the monetary authority of a country, like the central bank or currency board, controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency."

Monetary Tools
  • Cash Reserve Ratio (CRR): It is a minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the Central Bank.
  • Statutory Liquidity Ratio (SLR): It is the percentage of total bank deposits that Commercial Banks have to invest in Government Securities.
  • Bank Rate: It is the interest rate at which Central Bank lends money to Domestic Banks, often in form of very short loans.
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