Monetary policies that control inflation
Monetary policies that control inflation:-Open market operations: where the central bank sells treasury bills and bonds to the public. This removes money from circulation to reduce inflation.-Bank rate: increase in bank rate increases the cost of money. This raises the interest rates charged bycommercial banks and discourages borrowing.-Special deposits: the central bank may raise the cash ratio or liquidity. This reduces the money commercial banks have to lend.-Selective credit control:loans are given to selected projects which are important and less inflationary.-Reserve requirement:the central bank raises the cash ratio or liquidity ratio. This reduces the ability of commercial banks to create deposits.