About Monetary Policy

Monetary policy refers to the use of monetary instruments to influence the money supply in the economy, with the primary objective of maintaining stability in the general level of domestic prices an objective of Da Afghanistan Bank (DAB). According to Article 62 of the Law of the DAB, the bank, as the central bank, is responsible for formulating, adopting, and implementing monetary policy in Afghanistan. DAB believes the most effective and practical way to achieve its primary objective is to curb the liquidity level in the economy.

By achieving its primary objective, DAB fosters investors’ confidence to utilize their available financial resources for production and job creation, thereby contributing to economic growth. Furthermore, stability in this indicator plays a significant role in shaping household economic decisions and is regarded as a key determinant of savings levels. For this reason, DAB has adopted price stability as its primary objective in support of sustainable economic growth.

Currently, DAB conducts its activities within the framework of targeting monetary variables, under which domestic price stability is the primary objective of monetary policy, and a managed floating exchange rate regime is adopted as the exchange rate system. By using its monetary policy instruments, DAB strives to achieve the targets set for monetary variables.