Monetary policy are controlled by RBI. Through monetary policy they assure Price stability. In the Inflation period were goods and services prices become high, the RBI use monetary policy to stabilize the market by incresing the rate crr, slr, reverse repo rate etc. through this currency flow in market become low so demands fall this result prices fall. Infation controlled. and vise-vesa in deflation.

Introduction:
Monetary policy refers to the actions taken by the central bank or monetary authority of a country to regulate the money supply, interest rates, and credit conditions in the economy. The main objective of monetary policy is to maintain price stability.

Explanation:
The objective of monetary policy is to ensure price stability in the economy. Price stability refers to the level of inflation or deflation in an economy, where the general price level remains relatively constant over time. It is important to maintain price stability as it provides a stable economic environment for businesses and consumers to make decisions and plan for the future.

Effects of Price Stability:
Price stability has several positive effects on the economy:

- Reduced uncertainty: When prices are stable, businesses and households can better plan their economic activities as they have a clearer understanding of future costs and revenues. This reduces uncertainty and promotes investment, consumption, and economic growth.

- Purchasing power preservation: Price stability helps to preserve the purchasing power of money. When prices are stable, the value of money remains relatively constant, allowing individuals to maintain their standard of living and make informed spending decisions.

- Competitiveness: Price stability contributes to the competitiveness of a country's exports. Stable prices help to maintain the relative price levels of goods and services, making them more attractive in international markets.

- Financial market stability: Price stability is crucial for maintaining stability in financial markets. When prices are stable, investors can make informed decisions and allocate capital efficiently. This promotes financial market stability and reduces the likelihood of speculative bubbles or financial crises.

- Central bank credibility: By maintaining price stability, the central bank builds credibility and trust in its ability to control inflation. This helps to anchor inflation expectations and allows the central bank to effectively implement monetary policy.

Conclusion:
The main objective of monetary policy is to maintain price stability in the economy. Price stability has numerous positive effects on the economy, including reduced uncertainty, preserved purchasing power, increased competitiveness, financial market stability, and enhanced central bank credibility. By achieving price stability, monetary policy contributes to overall economic stability and sustainable growth.