what is the operating target of monetary policy?

Answer 1

The operating target of monetary policy typically refers to a specific variable that central banks aim to influence to achieve broader economic goals, such as price stability and full employment. Common operating targets include short-term interest rates, such as the federal funds rate in the United States, or monetary aggregates like M1 and M2. By adjusting these targets, central banks can influence borrowing, spending, and investment in the economy. Ultimately, the goal is to guide economic activity and maintain stable inflation rates.