Monetary Policy - Tools Used by Central Banks

Recently on 16th September 2010 in its mid Quarter Review, the RBI, in order to control inflation, hiked the Repo Rate by 0.25% to 6.0% and the Reverse Repo Rate by 0.50% to 5%. So what are these monetary policy tools that the RBI uses to manage inflation and how do these affect interest rates in the market? The Reserve Bank of India (RBI) uses various monetary tools to manage economic growth and inflation during times of boom and recession. The RBI uses various tools like CRR, SLR, Repo Rate and Reverse Repo Rate. Let us know these tools one by one. More information: read

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