Reserve Bank of Vanuatu

Home The Transmission of Monetary Policy to the Economy

Transmission of Monetary Policy to the Economy

The direct transmission of our monetary policy stance to the economy is limited, although an increase or decrease in the RBV’s official interest rate acts as an indicator to commercial banks or the economy that we are either tightening or relaxing monetary policy. The RBV indirectly affects the level of commercial banks liquidity through the open market operations.