10/11/2025
HAPPY INTERNATIONAL ACCOUNTING DAY TO FELLOW ACCOUNTANTS AND FINANCE PROFESSIONALS.
The Theme for this year’s ACCOUNTING DAY is FROM LEDGERS TO LEGACY.
Today I just want to share my knowledge and expertise on MONETARY POLICY
MONETARY POLICY
Monetary policy refers to actions taken by a central bank to influence the money supply and credit conditions to achieve macroeconomic goals like stable prices and economic growth.
This is typically done by managing interest rates and the amount of money in the economy. Key tools include setting interest rates, conducting open market operations (buying and selling government bonds), and setting reserve requirements for banks.
GOALS FOR MONETARY POLICY INCLUDES
Price stability: The primary goal is often to keep inflation low and stable, typically around a target rate of 2%.
Economic growth: By managing the cost and availability of money, central banks aim to support sustainable economic activity.
Full employment: Maintaining price stability helps support overall economic policies that aim for full employment.
TOOLS OF MONETARY POLICY
Interest rates: Central banks set a "bank rate" or key interest rate, which influences the rates commercial banks charge their customers for loans and the rates they offer on savings.
Open market operations: This involves the buying and selling of government securities to increase or decrease the money supply in the banking system.
Reserve requirements: The central bank can set the minimum amount of reserves that commercial banks must hold, which affects their ability to lend money.
Other tools: Depending on the country, a central bank may also use direct credit controls, exchange rate management, or other instruments like quantitative easing, where the central bank buys long-term assets to further lower interest rates and increase the money supply
Clive Chibesa
10/11/2025