Monetary

Aggregate
Targeting
Vanessa Rose C. Basilio
FM 3A
Monetary Aggregate
Targeting
an approach to monetary policy
whereby the central bank
adjusts its monetary policy
instruments to control the level
of monetary aggregates.

2
Monetary Policy

measures or actions taken by

the central bank to influence the
general price level and the level
of liquidity in the economy.

3
 2 Types of Monetary Policy
1. Expansionary Monetary
Policy
monetary policy setting that
intends to increase the level
of liquidity/money supply in
the economy and which
could also result in a
relatively higher inflation
path for the economy.
2. Contractionary
Monetary Policy
monetary policy setting that
intends to decrease the level
of liquidity/money supply in
the economy and which
could also result in a
relatively lower inflation
path for the economy.
4
 Monetary Policy Instruments

a) raising/reducing the BSP's policy interest rates;

b) increasing/decreasing the reserve requirement;
c) encouraging/discouraging deposits in the overnight deposit
facilities (ODF) and term deposit facilities (TDF) by banks;
d) increasing/decreasing its rediscount rate on loans extended to
banking institutions on a short-term basis against eligible
collaterals of banks’ borrowers; and
e) outright sales/purchases of the BSP’s holdings of government
securities.