Economy: The Role of Monetary Policy

Monetary policy monetary policy causes more problems than solutions. Management of the amount to be distributed varies for the economy. The Federal Reserve (Fed) has been approved to formulate monetary policy to control inflation, regulate business practices, and control the economy through steady economic growth by the US government. According to Taylor (2011), "Monetary policy includes changes in monetary value, which affects interest rate level and degree of borrowing" (p. 310).

The role of monetary policy is very important as macroeconomic policy influences the real economy mainly through credit markets and capital markets. At the beginning of the 21st century, monetary policy is the most powerful weapon owned by the government. Monetary policy affects interest rates (direct) and exchange rates (indirect). It also affects investment, which affects economic growth and employment. It has a major impact on financial markets - today's bonds and stocks, its most important role is to ensure price stability. In the case of Zimbabwe, all these have been ignored as macroeconomic policy is only distorted by political convenience. As a result, many departments are affected, job creation is not created, and the unemployment rate is rising.

Monetary policy is the process by which the national monetary authorities manage money supply to promote stable employment, price and economic growth. Monetary policy affects the economy, but it can not directly control the economy. Any limit can be achieved by monetary policy. Below are some factors that could make monetary policy inefficient. Monetary policy may affect the factors above, but it is not just about it. Fiscal policy also directly affects employment and economic growth. If the two policies are not adjusted, they can cancel each other. This is a particularly important issue if fiscal policy and monetary policy are controlled by two different political parties. Some Parties think that the economy is in a depression and may adopt an expanded policy. Other groups may think that the economy is growing rapidly and adopting austerity policies