Monetary policies

Central banks are responsible for creating, implementing and governing monetary policy in a country. While some of these mandates and goals are shared by the different central banks, there are goals that are unique. Ultimately, monetary policy boils down to promoting and maintaining price stability and economic growth. The distinction between the various types of monetary policy lies primarily with the set of instruments and target variables that are used by the monetary authority to achieve their goals. Goals - Price Stability - High Employment - Economic Growth - Interest Rate Stability - Financial Market Stability - Foreign Exchange Market Stability Monetary Policy Target Market Variable Long Term Objective Inflation Targeting Interest rate on overnight debt A given rate of change in the CPI Price Level Targeting Interest rate on overnight debt A specific CPI number Monetary Aggregates The growth in money supply A given rate of change in the CPI Fixed Exchange Rate The spot price of the currency The spot price of the currency Gold Standard The spot price of gold Low inflation as measured by the gold price Mixed Policy Usually interest rates Usually unemployment + CPI change

Policy of various Nations Australia - Inflation targeting Brazil - Inflation targeting Canada - Inflation targeting Chile - Inflation targeting China - Monetary targeting and targets a currency basket Czech Republic - Inflation targeting Colombia - Inflation targeting Eurozone - Inflation targeting Hong Kong - Currency board (fixed to US dollar) India - Multiple indicator approach New Zealand - Inflation targeting Norway - Inflation targeting Singapore - Exchange rate targeting South Africa - Inflation targeting Switzerland - Inflation targeting Turkey - Inflation targeting United Kingdom - Inflation targeting, secondary targets on “output and employment”. In general the US attempts to maintain a steady inflation of between 2% to 3%. United States - Mixed policy

../../trading-courses/fundamental/role-of-central-banks) ../../trading-courses/fundamental/interest-rates)

• The role of central banks

• Monetary policies

• Interest rates 101

• Central banks you need to know