IMF How To Notes

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Format: Chicago

Olamide Harrison, and Vina Nguyen. "How to Measure the Monetary Stance", IMF How To Notes 2025, 003 (2025), accessed February 23, 2025, https://doi.org/10.5089/9798400298882.061

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Summary

This note provides a conceptual framework to organize discussions of the appropriateness of the monetary policy stance and presents tools that country teams can employ to measure, report, and evaluate the stance of monetary policy. The note focuses exclusively on aggregate demand considerations—on whether the stance is tight or loose—without considering whether such a stance is appropriate for achieving policy objectives. The latter requires considering aggregate supply and Phillips Curve trade-offs. The note does not cover other macroeconomic policies, such as macroprudential or fiscal measures, which could also have a considerable impact on the effectiveness of monetary policy.

Subject: Central bank policy rate, Financial services, Inflation, Monetary policy, Monetary stance, Output gap, Prices, Production, Real interest rates, Short term interest rates, Yield curve

Keywords: Central bank policy rate, Global, Inflation, Monetary policy stance, Monetary stance, Natural interest rate, Neutral interest rate, Output gap, Real interest rates, Short term interest rates, Yield curve, Yield curve

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