1. A case study onMonetary policy Presented by: Kuldeep yadav Section – A Reg no – 6024
2. MONETARY POLICY : Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate. (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.
11. It will influence interest rate change overdraft and mortgage as well as for saving account. A change in Bank rate will also and share .
12. Most Bank would try to compensate for the loss of income, by adjustment in deposit rate to neutralize the impact on their net interest income they would reduce the cost of fond and also bring down the interest rate.
13. This encourage saving to invest to spent the memory on alternative like property and company shares any fall in demand for there assets will reduce their price. Similarly the significant fall in interest rate will result in higher stock prices.
14. In global market the exchange rate in influenced , both by expectation about future interest rate and by and unexpected changing in interest rate. This is because of investors expect interest rate to rise, they may be increase the amount they invest in a currency before interest rate actually rise
