Imports and domestic marketing of petroleum products have been deregulated and opened up to the private sector. The markets do not always function effectively. Independent regulatory agencies have been set up to protect the interests of consumers and end-users of utilities and public services. Despite this movement towards a liberalized and deregulated regime, old habits die-hard.
The message of such an interest rate rule is that monetary policy responds only indirectly to fiscal policy. That is, the rule specifies the adjustment of the interest rate to changes in output and prices (the indirect approach), not the adjustment to changes in tax rates or spending (as would be the case in a direct approach).