ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The transmission of monetary policy describes how changes made by the Reserve Bank to its monetary policy settings flow through to economic activity and inflation. This process is complex and there is a large degree of uncertainty about the timing and size of the impact on the economy.

Detailed explanation-2: -The Monetary Policy Committee The MPC determines the policy repo rate required to achieve the inflation target. The MPC is required to meet at least four times in a year.

Detailed explanation-3: -Traditionally, four key channels of monetary policy transmission are identified, viz., interest rate, credit aggregates, asset prices and exchange rate channels. The interest rate channel emerges as the dominant transmission mechanism of monetary policy.

Detailed explanation-4: -With the creation of the Bank of England in 1694, which was granted the authority to print notes backed by gold, the idea of monetary policy as independent of executive action began to be established.