Intermediate Target

Intermediate Target

Anything under indirect as opposed to direct control of a central bank. An example is money supply; a central bank usually cannot shred dollars when it wishes to reduce the money supply. Rather it raises interest rates, which provides an incentive for people to reduce the amount of money they pump into the economy.
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An ideal intermediate target would therefore serve to provide timely information on the implications of policy actions, allowing policymakers to make mid-course corrections in response to readings on the intermediate target.
More recently, before and during UK membership of the ERM, the exchange rate was effectively treated as an intermediate target which determined movements in interest rates.
Some analysts, even in the case of these multiple objectives, have advocated that the use of a single variable as an intermediate target would eliminate the need to forecast and enable monetary policymakers to automatically follow only one policy guide in their effort to stabilize the economy.
Open-market operations chase after the operating target rather than the intermediate target, and errors in achieving operating targets are not perfectly correlated with those in achieving intermediate targets.
Chinas monetary policy framework has gradually become more market-based, with money growth as the main intermediate target.
issued Executive Order B-30-15 establishing a new statewide intermediate target to reduce greenhouse gas emissions (GHG) 40 percent below 1990 levels by 2030, in order to guide policy and maintain momentum to reduce GHG emissions to 80 percent below 1990 levels by 2050.
The Commission's initial proposal anticipated gradually reducing the emissions of these vehicles to 135 gr CO2/km by 2020, with an intermediate target of 175 gr in 2016.
Intermediate target variables serve as surrogates for these ultimate objectives because they are observable relatively quickly and may be more directly controlled.
Monetary policy broadly achieved its main intermediate target for 1995: a pre-announced 3 per cent downward crawl of the exchange rate against the ECU during the year.
An intermediate target is defined as a variable Z which is an indicator and is also controllable over a range of policy regimes.
Alan Greenspan, chairman of the Federal Reserve, however, recently took issue with the usefulness of using M2 as an intermediate target for monetary policy.
it thus has reduced the indicator value of money in gauging the present state of the economy and diminished the usefulness of money as an intermediate target in the presence of uncertainties about the economy.

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