The Intermediate Target Of Monetary Policy - 1961 Words

?The inability to control the money supply has left central banks with no choice but to pursue price stability through the manipulation of short-term interest rates.? INTRODUCTION The intermediate target of monetary policy is a core part of the entire operation of monetary policy, the monetary authorities to observe the effect of monetary policy significance. Money supply as monetary policy intermediate variables, their effectiveness has been controversial features of theorists. Whether short-term interest rates through the operation by a central bank is aimed to make a price stability? It will be discussed in this paper. According to the given topic, there are some definitions and questions have to make clear in advance: What is Monetary Policy? How to control the money supply? How to manipulation interest rates? What impact it will take? CONTENT In order to promote full employment, price stability and economic growth a macro-economic management, the government regulates the level of aggregate demand by adjusting the interest rates is the meaning of the monetary policy. Money supply can be controlled by monetary policy instruments via three prime ways. The first method is statutory deposit reserve ratio.In the form of laws commercial banks and other financial institutions will be paid a portion of their deposits in the central bank as a reserve ratio. 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