Stricter Monetary Policy for price control


The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy with the primary objective of maintaining price stability while keeping in mind the objective of growth. The Agreement on Monetary Policy Framework between the Government and the Reserve Bank of India dated February 20, 2015 defines the price stability objective explicitly in terms of the target for inflation – as measured by the consumer price index-combined (CPI-C) – in the near to medium-term.

The framework aims at setting the policy (repo) rate based on a forward looking assessment of inflation, growth and other macroeconomic risks, and modulation of liquidity conditions to anchor money market rates at or around the repo rate. In the Second Bi-Monthly Monetary Policy statement 2016-17 issued on June 7, 2016, RBI stated that the stance of the monetary policy remains accommodative and any further scope for policy action would depend on macroeconomic and financial developments.

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