Bank Quote by Urjit Patel
“Monetary policy transmission encompasses the whole continuum of interest rates; of course, the central bank only determines the overnight policy rate.”
About This Quote
Monetary policy works through a chain of rates, but the central bank directly sets only the overnight rate.
In simple terms: Policy rate influences broader rates.
Key Takeaway
Transmission starts at the overnight rate.
Themes
Monetary policy
Interest rates
Transmission mechanisms
Central banking
Financial markets
Mood
Analytical
Technical
Type
Statement
Observation
When to use this quote
- Setting short-term rates
- Assessing transmission lag
- Analyzing yield curve
- Evaluating policy impact
Key Concepts
Policy rate
Rate corridor
Liquidity
Expectations
Practical Applications
- Forecasting inflation
- Designing monetary stance
Questions to Reflect On
- How does the overnight rate affect longer-term borrowing?
- What factors can disrupt the transmission chain?
![“Global central banks are working hard to lift their economies through an aggressively easy monetary policy. The ECB [European Central Bank] and BOJ [Bank of Japan] are buying tens of billions of bonds and other financial securities each month in an effort to stimulate their economies, which is…” quote by Mark Zandi](https://sms4smile.com/quotes/img-quotes/ddc/mark-zandi-12567_billions_global-central-banks-are-working-hard-to_2822189.jpg)
