The Monetary Authority adjusts spending economic units
24/9/2017 12:00 am
Through the interest rate control
Adopt monetary policy goal or set of goals with a clear impact on the structure of the economy, which makes them an integral part of economic policy, which had an active role in managing monetary policy and currency stability of the monetary sector in most economies of the world, including Iraq, what made them take Pilot centres in controlling imbalances affecting the economy, including inflation.
Economist Dr Tayyab Gabri male for "morning" that monetary policy objectives of achieving a high level of employment, where the Monetary Authority is keen on installing economic activity at the highest possible level of recruitment of human and natural resources, and the Monetary Authority to take all actions To reduce the levels of unemployment and attendant contractionary in output through expansionary monetary policy to increase investment rates.
He continued, the monetary policy to mitigate the violent changes in the price level of the attendant of fluctuations in the value of money, and the consequent adverse effects on the level of income and wealth distribution and allocation of economic resources, and the goal of price stability comes from the most important priorities of the Monetary Authority.
Gabri said: to maintain the value and volume of trading in the economy and maintain the balance of cash values with the actual values related to output growth are working on monetary policy in Iraq, and the intervention of the Monetary Authority by controlling the interest rate and bank credit to adjust spending economic units, In order to maintain the integrity of the currency of ameliorate swing by balance-of-payments deficit.
And between Gabri when balance of payments deficits raise interest rate monetary policy leading to reduced economic units credit, and then their liquidity makes them finance her employee heads back outside and the flow of foreign capital on domestic interest rate rises, what Leads to a high volume of foreign assets and improve the balance of payments and the reverse happens if excess,
the Monetary Authority is seeking to influence the investment environment and recovery and thereby increase the continuous and appropriate in real gross domestic product, or real per capita income, by influencing Investment through the interest rate change leading to achieve rates of growth in output and then narrow the hole inside.
Referring to the monetary policy to a number of constraints in her career, including conflicts between objectives, where monetary policy of inability to achieve two or more at once, for example, price stability often collides with stability in interest rates and a high rate of Use.
He stressed that reducing inflation requires a deflationary monetary policy works to raise interest rates, reduced investment and employment, and there is a slowdown in monetary policy that require time to choose and start implementing results, and become the procedures do not match the conditions and goals That came to realization.
The situation of financial panic which could undermine the monetary policy of insanity if, the Monetary Authority to change stratigitha in the event of a financial panic to ensure the safety of the banking system and credit flow properly.
Dr drew, under the deflationary policy if financial panic occurred for reasons that may not be in cash but real reasons or expectations of individuals, it would hamper the monetary policy, the Monetary Authority should be expansionary policy to avoid exacerbating the situation.
Gabri explained that when tracking a deflationary monetary policy authority, by raising the interest rate significantly, this action could cause the unstable business environment and money market portfolios of individuals, generating outrage among dealers in economy, then you have the Monetary Authority Change the policy.