Interest Rate Setting Mechanisms and Market Operations

The process by which central banks set and control short-term interest rates is the core of modern monetary policy implementation. This technical course provides a rigorous analysis of the **Interest Rate Corridor System** and the diverse market operations used to manage banking system liquidity and steer the target rate. Participants will explore the mechanics of reserve requirements, standing facilities, and various Open Market Operations (OMOs) like repos and outright purchases. A focus will be placed on the practical and operational challenges of maintaining effective control in different market environments, including periods of reserve scarcity and reserve abundance, and the transition between operating frameworks.