№ 12/2018

Fìnansi Ukr. 2018 (12): 72–84

MONETARY POLICY

SELIVERSTOV Valerii ¹

¹Zaporozhye National Technical University
OrcID ID : https://orcid.org/0000-0003-2601-8834

Features of the effect of short-term interest rates on expenditure as a key element of implementation of monetary policy

Today considerable attention is attracted with negative values of interest rates on overnight loans, which are formed by the leadership of the European Central Bank, the Bank of Japan and the National Bank of Swiss, in order to influence deflationary processes. The purpose of this study is to analyse the impact of short-term interest rates on the level of personal consumption expenditures (PCE), as a key element of the implementation of monetary policy. This study analyzed the specifics of the influence of monetary instruments of the central banks of Canada, Australia, South Korea and Israel on the level of PCE, in particular due to changes in the level of short-term interest rates. For this the regression and auto regression models, which use the following time series: PCE, overnight rates, and the amount of cash in circulation, was created. The results of this study indicate the need to revise the current attitude to the interest rate as a main instrument of indirect influence on the general level of prices and to determine the more effective levers of influence on deflationary processes. In addition, they cast doubt on the correctness of the current attitude towards the nature of interest rates – in the conditions of the economy of Australia interest rate cuts do not lead to growth, but rather to a decrease in the PCE. The caution about the attitude of the NBU leadership towards the traditional recipe for implementing its own monetary policy due to the probability of insufficiently effective influence of changes in the level of interest rates to achieve the target inflation indicators was expressed. It is also proposed to focus on the non-monetary leverages to regulate the inflation process.

Keywords:short-term interest rates, monetary policy, the personal consumption expenditure, the overnight rate, the cash in circulation

JEL: E52, E58

SELIVERSTOV V. . Features of the effect of short-term interest rates on expenditure as a key element of implementation of monetary policy / V. . SELIVERSTOV // Фінанси України. - 2018. - № 12. - C. 72-84.

Article original in Ukrainian (pp. 72 - 84)

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