BANKING AFFAIRS

Detailed explanation-1: -Monetary targeting (MT) is a simple rule for monetary policy according to which the central bank manages monetary aggregates as operating and/or intermediate target to influence the ultimate objective, price stability.

Detailed explanation-2: -Central banks in many advanced economies set explicit inflation targets. Many developing countries also are moving to inflation targeting. Central banks conduct monetary policy by adjusting the supply of money, usually through buying or selling securities in the open market.

Detailed explanation-3: -The RBI controls Inflation and Deflation by employing a variety of monetary policy tools such as Repo Rate, Reverse Repo Rate, Bank Rate, Open Market Operations, Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Liquidity Adjustment Facility (LAF), Market Stabilisation Scheme.

Detailed explanation-4: -Rules-based monetary policy gives a central bank a strict set of guidelines that dictate its future actions. For example, a rule-based policy could require a central bank to undertake expansionary or contractionary policies to maintain a particular price level.

Detailed explanation-5: -Fiscal Policy. Monetary policy is enacted by a central bank to sustain a level economy and keep unemployment low, protect the value of the currency, and maintain economic growth.