Economics Monetary Policy Questions
The Reserve Bank of India (RBI) plays a crucial role in monetary policy in India. It is responsible for formulating and implementing monetary policies to maintain price stability and ensure the growth of the Indian economy. The RBI controls the money supply in the economy through various tools such as interest rates, reserve requirements, and open market operations. It sets the benchmark interest rate, known as the repo rate, which influences borrowing costs for banks and ultimately affects interest rates for consumers and businesses. The RBI also manages the foreign exchange reserves of the country and intervenes in the foreign exchange market to stabilize the value of the Indian rupee. Additionally, the RBI acts as a regulator and supervisor of the banking system, ensuring the stability and soundness of financial institutions. Overall, the RBI's role in monetary policy is to maintain price stability, promote economic growth, and safeguard the financial system in India.