Monetary Policy & its Objectives

Monetary policy plays an important role in the economic development of a country. It is basically concerned with measures undertaken by the central bank of the country to control the money market with the view to influence the working of the economy.

Objectives of Monetary Policy

Some of the major objectives of monetary policy include the following:

  1. Stabilisation of external values to monetary units.
  2. Stabilisation of price level.
  3. External balance or balance of payment equilibrium.
  4. High level of employment.
  5.  High rate of saving and investment.
  6. Creation, working and expansion of financial institutions.
  7. Debt management.
  8. High rate of growth.
  9. Correction of cyclical fluctuations in economic activities.
  10. Higher rate of economic growth.
  11. Reduction of income inequalities