Q. Interest rate policy is a tool of which economic policy framework?
Answer: Monetary policy
Notes: Monetary policy is conducted by central banks to control money supply and interest rates. In India, the Reserve Bank of India manages monetary policy under the Reserve Bank of India Act, 1934. Changing interest rates is a primary method to influence inflation and economic growth. The Monetary Policy Committee determines policy repo rates. Interest rate changes affect borrowing, spending, and inflation in the economy.