The Reserve Bank of India (RBI) uses monetary policy as a key tool to contain inflation and maintain price stability which is crucial for sustainable economic growth.

RBI primarily uses the following instrument :-

1. Repo Rate :- [At this rate, commercial bank borrows] By increasing Repo, it make borrowing more expansive lead to curb in spending and reduce demand, help in lower inflation.
2. Cash Reserve Ratio :- [Portion of deposit banks must held with RBI] By raising CRR, RBI reduces the funds available for lending, results decreasing in money supply in economy.
3. Open Market Operation [OMO]:- RBI conducts OMO by selling government securities to reduce liquidity. By absorbing excess money from the markets limits the demand and thus reduce inflation.
4. Inflation targeting :- RBI follows inflation targeting framework where it aims to maintain inflation within 4% +_ 2% range. And adjust policy rates accordingly to curb inflation.

Through these tools, RBI influences aggregate demand and control inflation. However, while controlling inflation the RBI must also ensure thus it does not hamper growth and maintaining a balance between inflation control and economic development.