There are two ways of controlling monetary policies. Quantitative measures and Qualitative measures. Quantitative Measures: In it the central bank uses interest rates for controlling of monetary policy. If there is inflation in a country then bank increase the interest rates the circulation of money decreases and inflation is controlled.
If there is defilation in a country then it decreases the interest rates and circulation of money increases and people take more loans. Reserve Ratio: Increasing and decreasing of reserve ratio is also a way of maintaining monetary policy. If there is more circulation of money then central bank increase the reserve ratio for commercial banks and banks advances less loans to the public.
If there is less circulation of money in a country then central bank decreases the reserve ratio and commercial banks advances more loans to the public. Issuing of Bonds: If there is more circulation of money in a country then the Government issues he bond and the public purchase the bond and circulation of money decreases. If there is less circulation of money then Government sale the bonds and in this way circulation of money increases.
Qualitative Measures: In this way the central bank adopt following methods. Morally: the bank morally gave instructions to the commercial banks for controlling of flow of money. Ethically: the bankers show ethical behavior for this purpose, Credit Ratio: It is also a one way for controlling the monetary policy.