As per this approach, interest rates or rates of return in different markets (money, capital and government securities markets), along with data such as on currency, credit extended by banks and financial institutions, fiscal position, trade, capital flows, inflation rate, exchange rate, refinancing and transactions in foreign exchange available on high-frequency basis, are juxtaposed with output for drawing policy perspectives.
What is the operating procedure of monetary policy in India? In the current monetary policy framework, with growing inter-linkages in the financial market, reliance on direct instruments has been reduced and liquidity management in the system is carried out through OMO in the form of outright purchases/sales of government securities and daily reverse repo and repo operations under Liquidity Adjustment Facility (LAF).