THEORETICAL ASPECTS OF DETERMINING THE INTEREST RATE IN THE TRANSFORMATION OF MONETARY POLICY

Abstract

Modern practice of macroeconomic management is based on the regulation of money supply through the management of interest rates, mainly short-term. Short-term interest rate management is a Central approach to implementing monetary policy in countries such as the United States, the United Kingdom, and the Euro area. By changing the interest rates on operations of providing or absorbing liquidity, the national Central Bank has a significant impact on the level of interest rates for the same period in the money market. Consequently, the structure of all short-term rates changes for a longer period. Depending on a number of factors, including the exchange rate and the expected level of inflation, the structure of long-term interest rates also changes. Each change occurs with a certain time lag. Changes in interest rates affect the savings and investment decisions of households and firms. The purpose of this article is to study the transformation of the concept of interest and the development of interest rate theories. There are used methods of critical and comparative analysis, a systematic approach to the study of information. The theoretical aspects of determining the interest rate in the development of monetary policy are systematized. The main approaches to the development of interest rate policy in the framework of monetary regulation are studied. The obtained theoretical results can be used in the formation and adjustment of monetary policy.