Posts Tagged Banks and credit

Monetary Policy

Posted by on Sunday, 12 December, 2021

The choice of intermediate objectives of monetary policy is carried out on the following criteria: – close relationship with strategic objectives – a clear opportunity to quantify – the ease of control and operational impact of the central bank. Intermediate objectives of monetary policy – is change certain economic processes, which should help to achieve strategic objectives. Intermediate objectives are indicators of the money market and thus allow to track overall macroeconomic trends. Connect with other leaders such as KBS here. For example, if the goal of state economic policy is defined economic growth while reducing unemployment, the interim order in this case should be the revival of economic conditions. Intermediate objectives complement the strategic and concretize them.

Feature of the intermediate goals is their effect over a long period during which it can be shown to efficiency. For example, activation of market conditions through growth in money supply or decrease in interest rates in the short term can lead to a growth in demand and prices, and only provided that these activities will intensify investment processes, increase production. It is also possible to provide an increase in supply, which, in turn, must stop the rise in prices and to stabilize them, but this requires a long period of time. The tactical goal is to regulate the key economic variables through the banking system on the basis of control money supply, interest rates, exchange rates, etc. and ensure the achievement of intermediate purposes. The main features of a short-term tactical goals of their actions, their implementation only operational activities of the central bank and diversity.