What is it about?
A notable feature of the empirical research on the interest rate autonomy in the presence of exchange rate stability strategy is that very few studies seek to determine whether the use of interest rate policy to fine-tune the exchange rate misalignments has been undermined by sterilised foreign exchange intervention.
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Why is it important?
The findings provide some policy implications that the interest rate instrument can serve as a coordinating function to fine-tune the exchange rate misalignments for improving the macroeconomic stability and serve as an external shock absorber to avoid or mitigate impact of instability in the foreign capital market.
Perspectives
I hope that this article may contribute to the existing literature and policymakers that the interest rate autonomy and the strategy of exchange rate control could coexist and working together to fine-tune the exchange rate misalignments.
Pei-Tha Gan
Universiti Pendidikan Sultan Idris
Read the Original
This page is a summary of: Interest rate autonomy in the presence of exchange rate stability: evidence from 13 selected Asia Pacific countries, Journal of the Asia Pacific Economy, December 2017, Taylor & Francis,
DOI: 10.1080/13547860.2017.1408570.
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