Monetary policy are made by Reserve bank of india (RBI) or central bank of india to control the flow of money in the economy. central bank control the short term interest rate but the economy is affected by long term maintenence of interest rates which is charged by the commercial banks from there customers.

To maintain the interest rates by RBI or central bank have to change the intrest rates which they charge from the commercial banks it also include forex.

when the prices are increased in the short term they stick to the prices and the cost of capital increase that's why it put more focus on real rates than nominal interest rates.But the long term increase in the interest rates will reduce the cost of borrowing and the interest paid on deposits. which will help the customers to increase there household spendings on Durable goods and also make investments.

The increasing investment on Durable goods will increase the Aggregate Demand and Employment. Increase in the expansionary monetary policy will decrease the interest rates and lower the cost of capital which leads to increase in investment spending on consumer durable goods which increase the demand for the Output and hence the income increase.