In this respect, monetary policy differs significantly in nature from the government’s economic policy, which aims to achieve its objectives through administrative means such as laws and regulations. Specifically, monetary policy affects the supply and demand of funds in the financial markets through the implementation of the Bank’s daily operations, such as bill and bond transactions.
The mechanism is initiated in changes made to the money market interest rates, or in technical terms, changes to the overnight rates in the interbank market, which can be referred to as the wholesale market for cash and reserves.