How Central Bankers Set Monetary Policy?

HOW DO CENTRAL BANKS DETERMINE POLICY?

Movements in the financial markets are significantly influenced by central bank policy. Central bank officials acquire, project, and analyze economic data to forecast and assess the economy’s future course and how it relates to the central bank’s policy objectives. A central bank will often take policy action in response to difficulties or divergences from the optimal course of the economy. But deciding on a central bank’s policy is more complicated than merely sending a press release announcing a change in interest rates, a modification to asset purchases, or other supporting measures. Financial market transactions are also required for the implementation of central bank policy.

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