MONETARY POLICY OBJECTIVES AND TARGETS
403
Chakravarty Committee recommended a monetary targeting framework
to target inflation in line with output growth.
2
Monetary targeting was
successful as a tool of monetary policy in the late 1980s and early 1990s
as inflation was driven by excessive monetary expansion.
2.
Interest rates: The price of credit or the nominal interest rate is another
intermediate monetary policy target. Central bank policy actions have direct
effects on nominal interest rates and interest rates can be observed daily.
However, the relationship between interest rates and economic activity is
not necessarily directly ...
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