Monetary Conditions Index

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Monetary Conditions Index

An index tracking various measures affecting monetary policy. Different central banks include different measures in their MCIs, but they always include major exchange rates and prevailing interest rates. The MCI can help a central bank determine whether its monetary policy is too loose or too tight. The Bank of Canada was the first, and is the most prominent user of an MCI.

References in periodicals archive ?

In the calculation of Monetary Conditions Index the estimation of weights of interest rate and exchange rate for an objective function are very important.

From this estimated model we obtained weights of rate of interest and exchange rate that are to be used in the construction of monetary conditions index of inflation in Pakistan.

Finally monetary conditions index (MCI) is constructed by utilising the weights that are estimated in the previous section.

Monetary conditions index: a composite measure of monetary policy in Pakistan

A rise in the real rate of interest is associated with a rise in the monetary conditions index.

A monetary conditions index for New Zealand," Discussion Paper G97/1, (1997), Reserve Bank of New Zealand.

Design flaws in the construction of monetary conditions indices? A cautionary note

1995), "The role of monetary conditions and the monetary conditions index in the conduct of policy", Bank of Canada Review, Autumn, 53-59.

1998), "The roles of monetary conditions and the monetary conditions index in the conduct of monetary policy: the case of Thailand under the Floating Rate Regime", Quarterly Bulletin 3, Bank of Thailand, September.

The unintended consequences of using an MCI as an operational monetary policy target in New Zealand: suggestive evidence from rolling regressions