RBI takes monetary measures while the Government takes fiscal measures to contain inflation.
Monetary Measures
As part of the monetary policy review, the RBI takes suitable measures to moderate demand to levels consistent with the capacity of the economy to maintain its growth without provoking price rise. It is generally agreed that high rates of inflation is caused by an excessive growth of the money supply.
The RBI controls the money supply by its monetary policy via which it alters the interest rates and alters the banking reserve requirements to bring the inflation in its comfort zone {which is around 5%}.
The ....
