They may include, for example, broad monetary aggregates or market interest rates. In addition, the policy conduct involves certain instruments which a central bank uses to steer the financial conditions under its direct control. These include reserve requirements, the monetary base, as well as the key interest rates at which the central bank provides liquidity to market participants.
Changes in monetary policy strategy have very different implications, depending on which of these two constituent elements – policy objectives or policy conduct – they affect. From a practical perspective, objectives are more difficult to change, inter alia, because they are usually enshrined in law. By contrast, the conduct of policy is, to a large extent, at the discretion of the respective central bank.