First, given the reality of multiple goals assigned to the monetary authority, the achievement of macroeconomic and price stability received greater emphasis. Thus the overall objective has had to be approached in a flexible and time variant manner with a continuous rebalancing of priority between growth and price stability, depending on underlying macroeconomic and financial conditions.
As we observed the severe costs of financial instability elsewhere, financial stability has ascended the hierarchy of monetary policy objectives since the second half of the 1990s. Strong synergies and complementarities are observed between price stability and financial stability in India.