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Monetary Policy in Hybrid Regimes :, The Case of Kazakhstan, Natan Epstein, Rafael Portillo

This paper analyzes the monetary policy framework in Kazakhstan. The authorities have been successful in containing inflation in the context of a managed exchange rate regime. Over the past two years, the central bank has taken steps to enhance its ability to regulate liquidity in the financial system. However, the current policy interest rate does not properly signal the stance of policy, reflected in a weak transmission from the policy rate to money market interest rates. With the use of a stylized model, the paper studies the macro determinants of money market interest rates under the current framework, and illustrates both the benefits and challenges of active interest rate policy. The model shows that limited use of instruments to steer short-term interest rates weakens the framework’s ability to counteract shocks. Finally, the paper explores the implications of varying degrees of exchange rate flexibility for interest rate policy and open market operations
Table Of Contents
Cover; Abstract; Contents; I. Introduction; II. The Current Policy Framework and Recent Developments; Figures; 1. Exchange Rates; 2. Kazakhstan: Banks' Excess Liquidity and Interest Rates; 3. Kazakhstan: Money Market Interest Rates; 4. Interest Rate Corridor and Exchange Rate in Selected EM Countries; III. A Model-Based Analysis of the Current Policy Regime; 5. Impulse Response, Positive Shock to x, Current Framework; 6. Impulse Response, Negative Shock to x, Current Framework; IV. A Model-Based Analysis of Alternative Policy Regimes
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (33 p.)
Specific Material Designation
Form Of Item

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