This study examines the role of monetary policy in stabilizing prices and output, focusing on the perspectives of bankers in Jaipur and Jodhpur districts, Rajasthan. Utilizing a quantitative approach, data were collected from 400 bankers through structured questionnaires to assess their perceptions of monetary policy tools, such as interest rates, reserve ratios, and open market operations, and their effectiveness in controlling inflation and promoting economic growth. The study employs Cronbach’s Alpha for reliability, t-tests, and ANOVA to analyze differences in perceptions across demographics and banking sectors. Findings reveal that bankers perceive monetary policy as moderately effective in stabilizing prices, with interest rate adjustments being the most influential tool, while its impact on output stabilization is less pronounced due to structural constraints in Rajasthan’s economy. Significant variations in perceptions were observed based on bankers’ experience and bank type (public vs. private). The study highlights the need for tailored monetary policies that address regional economic challenges, such as agricultural dependence and limited industrial growth. These insights contribute to the literature on monetary policy transmission in developing economies and offer practical implications for policymakers and central banks in enhancing policy effectiveness at the regional level.