Abstract :This article has focused the discussion on monetary policy framework according to Islamic perspective. The monetary policy framework according to the established Islamic perspective has shown that it is an alternative to achieve price stability and help manage economic volatility. The problem here is that many do not know in depth about the monetary policy framework. Therefore, this study has been conducted to elaborate clearly on the problem. Thus, the writing of the paper is intended to identify of history policy framework, discuss about monetary policy in Islamic economic framework and monetary policy in conventional economic framework, explain about different between Islamic monetary framework and conventional economic framework, parsing roles of central bank in establishing Islamic monetary policy, reviewing tools of Islamic monetary policies and identify challenges in applying Islamic monetary policy and strategies. The methodology used in producing the study was the use of library research approach through full documentation analysis. Authoritative reference sources such as PhD, Master’s studies, journals, seminar papers were selected as primary references. The documents used are from printed and electronic reference sources taken from authoritative websites such as ResearchGate, Google Scholar, digital library repositories and others. The findings of this study conclude that monetary policy is a key component of economic policy in a market economy. It is noted that the Islamic framework on monetary policy involves a strong intention to directly improve the performance of the real sector and meet public demand by balancing financial and real sector activities. Keywords : Monetary, policy, challenges, strategies
