The mechanism that transmits the monetary policy impulse from the Central Banks to the real economy is, in essence, a chain with four links: first, the official rate(s); second, the rate at which banks fund themselves, i.e. the funding rate; third, the rate at which banks lend to the economy i.e. the loan rate; fourth is the Money market rate, that is influenced by the amount of excess liquidity. The loan rate, however, is the most important for the real economy!
Posted on: Mon, 15 Jul 2013 09:11:31 +0000
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