You keep reading and listening to news on all the financial news papers and TV channels about the CRR hike by the RBI. Let us see what exactly do there terms (Monetary policy, Credit Policy,Bank rate, CRR, SLR, Repo rate, reverse repo rate) mean and how they affect the stock market and the stock investing public.

What is monetary policy?

Basically this is a policy which controls and regulates the supply of money in the Indian economy. This policy is a tool used to influence interest rates, inflation, and credit availability through changes in the supply of money available in the economy. In India it is also called the Reserve Bank of India’s ‘Credit Policy’ as the stress is primarily on directing and controlling credit.

Monetary policy is revised from time to time by the RBI keeping the needs of the economy in mind. Monetary policy gives the economy the desired direction by policy makers.