At the same time, China’s process of transitioning to a more domestic, consumption-driven economy from one that is investment-led and relies heavily on exports, was a major factor in slowing down its overall economic growth. We are all acutely aware that this slowdown adversely affected commodity prices and export-driven countries, which has severe repercussions for emerging-market economic growth, including on the African continent.
Decisions by businesses about investment and by households about housing and consumption are altered by changes in interest rates and other credit conditions. Monetary policy also can indirectly impinge upon other components of aggregate demand. As a result, in the shorter run, monetary policy can play an important role in stabilizing the economy from undesired fluctuations in economic activity and inflation.