Monetary Policy Essay
Revision of Open Market Operations: In October 1956, the open operations policy of the Reserve Bank was revised and it started giving discriminatory support to the sale and purchase of government securities.
Initially, the bank made large purchases of government securities.
Thus, controlled expansion of money supply was essential for growth with reasonable price stability in the country.
To achieve the objectives of the monetary policy, the Reserve Bank has adopted the following measures: (A) Measures for expansion of currency and credit. These measures are discussed in detail as follows: A.
Measures for Currency and Credit Expansion: For meeting the developmental needs of the economy the continuous expansion of currency and credit was required during the planning period.
This expansion has been achieved by using the following measures: 1.
The stock market also showed a dramatic drop which is not good for our economy.Since 1957, the Reserve Bank has included the export bills also in the bill market scheme, so as to help the commercial banks to provide credit to exporters also. Financing Facilities to the Priority Sectors: Even though, the general policy of the Reserve Bank is to control credit expansion, still it continues to provide credit facilities to priority sectors such as small scale industries and cooperatives.The Bank has been providing short term Finances to the rural cooperatives also. Refinancing and Rediscounting Facilities: The Reserve Bank also follows a policy of selective refinance and rediscount facilities.It works by affecting demand across the economy—that is, people's and firms' willingness to spend on goods and services”.The information that I located suggested that the main issues that monetary policy deals with are inflation and unemployment which usually affect each other.Monetary Policy I chose to research and write on the topic of monetary policy. From my research I would define monetary policy as the macroeconomic act of keeping the country financially stable.According to object of monetary policy is to influence the performance of the economy as reflected in such factors as inflation, economic output, and employment.Monetary policy influences the supply of money the cost of money or the rate of interest and the availability of money.One of the most important functions of Reserve Bank is to formulate and administer a monetary policy.However the inflation rate looked good and was not increasing at an uncontrollable rate.Here is an essay on the ‘Monetary Policy’ for class 11 and 12.