Causative Alliance between Monetary Policy, Inflation and Inflation Rate at Economic System in Pakistan

Purpose: This study examine both the monetary policy and inflation are the issues of high interest and importance, and how thus the studying them and their impact on the extension of the macroeconomic variables is a which are concerned for our culture/society.The purpose of this proposal is focusing to identifying the existing connections between the inflation rate and some important macroeconomic indicators /variables and also on the dynamics of inflation at a national level. The main objective of this study is to reveal the causal relation between the inflation rate and the interest rate of the monetary policy and also between the inflation rate and the unemployment rate,Conclusion: There is an inverse statistically significant relation between the inflation rate and the unemployment rate. This indicates that the inflation rate is an effective instrument in preventing the increase of in unemployment. Monetary policy has demonstrated.