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A country’s Central Bank performs many essential functions of its’ financial system. But at its’ core, the job of the Central Bank is to balance keeping inflation stable and maximizing employment & or growth. This is where the terms ‘Dovish’ and ‘Hawkish’ come from. Dovish policymakers are said to be more concerned with influencing employment/growth.…

The money supply encompasses all forms of money circulating within an economy, facilitating transactions and acting as a store of value. It’s often classified into different categories, each representing a specific form of currency or financial instrument. So what are the different types of money? M0 (MB – Monetary Base): M0, the monetary base, represents…

At its core, the credit multiplier effect refers to the amplification of initial deposits through a series of loans and re-deposits within the banking system due to its’ fractional reserve nature. This phenomenon has a cascading effect, where every dollar deposited in a bank can multiply into several dollars in the economy. So what is…

The rate of interest is at its’ most basic level, the cost of money. The price you pay to borrow money for a house, car, or business. If rates are low, the cost of borrowing is cheap, so more people can and do, thus more credit is created. Equally if the cost of borrowing rises,…