What is the most effective tool of monetary policy?

The most frequently used monetary policy is the Open Market Operations (OMO). The sale and purchase of Government securities for absorption and injection of durable liquidity is known as Open Market Operations. You can read about the Monetary Policy – Objectives, Role, Instruments  in the given link.

Further readings:

  1. Monetary Policy Committee (MPC) – Structure, Objectives UPSC Notes
  2. Monetary System – Types of Monetary System 

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