maddy monetary policy pres
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7/23/2019 Maddy Monetary Policy Pres
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Instrum
ents ofMonetar
y Policy
Mandeep Yadav
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TOOLS OF MONETARYPOLIY
There are two kinds of tools:
Quantitative tools –control
the volume of credit andinflation, indirectly.
Qualitative tools –theycontrol the supply of money
in selective sectors of the
economy.
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•
M i n i m u m r a t e a t ! " i c " t " e
c e n t r a l # a n $ p r o v i d e s l o a n s t o c o m m e r c i a l # a n $ s
%an$ Rate
• A m o u n t o f m o n e y t " a t # a n $ s m u s t s e t a s i d e ! i t " R % I a & a i n s t t " e i r d e p o s i t s
as" ReserveRatio 'RR(
• P e r c e n t a & e o f # a n $ f u n d s t o # e m a i n t a i n e d i n & o v e r n m e n t a n d
a p p r o v e d s e c u r i t i e sStatutory
Li)uidityRatio 'SLR(
• R a t e a t ! " i c " R % I l e n d s t o o t " e r # a n $ s a & a i n s t & o v e r n m e n t s e c u r i t i e s
Repo Rate
• R a t e a t ! " i c " R % I # o r r o ! s f r o m o t " e r # a n $ s
Reverse RepoRate
•
P u r c " a s e a n d s a l e o f s e c u r i t i e s i n
t " e o p e n m a r $ e tOpen Mar$et
Operations'OMO(
Monetary Policy * Terminolo&y
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urrent Rates
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Target Variables
-Inflation
-Interest rate-Real GDP
-Employment
-Consumption
-Savings-Investment
Policy Variables
- Money supply
- OMO: Liquiity !onitions
- poli!y rates "CRR# repo et!$%
Monetary Policy * In+uence
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