Monetary Policy

In your study of Monetary Policy, you will need to be able to examine the policy in two broad ways. First, you will need to understand the way in which the policy works. This means that you will need an understanding of the tools which are available to the RBA, the way in which these tools can be used, and the approach that has been taken to monetary policy in the last ten years.

Secondly, you will also need to be able to assess the policy as it has been applied to the Australian economy. To do this, you will need to understand the theoretical way in which changes in monetary policy should be able to affect the economic goals of the government, and then look at what has actually been implemented. At times you will note that policy changes have been implemented in an appropriate manner to achieve the goals, at other times the approach may have been altered slightly given the benefit of hindsight.

To help you understand this breakdown, on this site the study of this goal has been split into two sections. By following the links below you will be able to go through either the “Policy Approach” (the theory and application of monetary policy) or the “Policy Impact” (the way in which monetary policy can be used to affect the goals of the Australian government, and how effective the policy has been in helping to achieve these goals).