These all represent positive developments in terms of addressing the supply side constraints in our economy over the long run. We now have a far greater hope that in the future, given the support of all elements, a critical mass of progressive regional governments can be achieved, and thus resulting in a faster paced economic growth that is higher in quality and better balanced.
Models of the monetary transmission channels would suggest that the central bank sets the short-term interest rate, which, in turn, influences interest rates over the entire maturity range, the exchange rate and, possibly, other asset prices. Through the different spending components, these financial variables affect output and prices. Furthermore, the banking channel has to be taken into consideration.