# Monetary Policy

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Set by central banks

- interest rates via cash rates
- inflation targets
- balance sheets
- expectations of future policies

Dual mandate: 

Inflation <--> Employment

Central bank balance sheets
- buying back govt bonds
- also known as quantitative easing
- lowers interest rates


**Forward guidance**
Comments from central banks are enough to impact the economy

Central banks
- Hawkish -> raising interest rates
- Dovish -> lowering interest rates