What are the different types of monetary policy strategies?

Monetary policy refers to the actions taken by a central bank, such as changing interest rates or controlling the money supply, to influence economic conditions and stabilize the economy. There are several types of monetary policy strategies employed by central banks worldwide. One common strategy is interest rate targeting, where the central bank adjusts short-term interest rates to influence borrowing costs and overall economic activity. Another strategy is inflation targeting, where the central bank sets a specific inflation rate as a target and adjusts its policies accordingly. Exchange rate targeting is another approach, in which the central bank intervenes in the foreign exchange market to maintain a stable exchange rate. Finally, there is also a strategy called quantitative easing, where the central bank buys government bonds or other securities to inject money into the economy and stimulate lending and investment. The choice of strategy depends on various factors, including the economic conditions, inflationary pressures, and the central bank's specific goals and mandates.

This mind map was published on 18 September 2023 and has been viewed 93 times.