Monday, August 24, 2009

Objectives of Monetary Policy

The principal objectives of Monetary Policy are:

(a) Safeguarding of the country’s gold reserves

(b) Price stability

(c) Exchange stability

(d) Elimination of cyclical fluctuations

(e) Achievement of full employment

(f) Economic Growth of a country

(g) Balance of Payments Equilibrium.

In addition to this the other objectives are

(i) Creation working and expansion of different financial institutions.

(ii) Provision of an efficient payment mechanism.

(iii) Proper debt management.

(iv) Evaluation of rational interest rate structure.

(v) Operation of credit control measures.

(vi) Income stabilization by preventing or mitigating cyclical fluctuations.

(vii) To ensure neutrality of money.

(viii) To bring about monetary equilibrium in the economy by equalising saving and investment and demand for and supply of money.

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