Low money market volatility benefits monetary policy transmission
18 April 2025By Fédéric Holm-Hadulla and Sebastiaan PoolCentral banks usually seek to align very short-term interest rates in the money market with their own policy rate. But money market rates fluctuate also for reasons other than policy. This blog shows that monetary policy is more effective if such fluctuations are small.Discussions about monetary policy usually centre on whether interest rates should go up, down or stay the same. The complexities…