Main objectives of monetary policy

which of The following is not main objectives of monetary policy are

• Exchange rate stability
• Economic growth
• Disequilibrium in the balance of payments
• Neutrality of money

Which of the above is correct statement?

1. (1)and (2)
2. (2) and (3)
3. (1), (2) and (4)
4. (3) and (4)

EXPLANATION

Monetary Policy – Meaning

• Monetary policy is framed and implemented by the Reserve Bank of India (RBI).

• It regulates the money supply, interest rates, and credit availability to achieve certain macroeconomic objectives.

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Main Objectives of Monetary Policy in India:

1. Price Stability (control inflation)

2. Economic Growth

3. Exchange Rate Stability

4. Control of Credit

5. Full Employment

6. Equilibrium in Balance of Payments

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Now, let’s analyze each option:

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(1) Exchange rate stability

✅ This is a main objective — maintaining stability in the value of the rupee against foreign currencies is an important goal of monetary policy.

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(2) Economic growth

✅ Also a main objective — RBI’s monetary policy aims to promote growth by ensuring adequate credit flow to productive sectors.

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(3) Disequilibrium in the balance of payments

❌ Not an objective — The objective is to achieve equilibrium (balance) in the Balance of Payments (BoP), not disequilibrium.
So, this is not a goal of monetary policy.

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(4) Neutrality of money

❌ Not a main objective — The idea of neutral money (that money should not influence economic variables) is a classical economic theory, not a practical policy goal for modern economies.
Hence, it is not a main objective of monetary policy.

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Summary Table

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✅ Final Answer: (3) and (4)