In most cases, the central bank’s monetary policy is adjusted slightly, because if interest rates change too quickly, it may cause confusion to the market.
The large changes in the central bank’s monetary policy in a short period of time will not only adversely affect traders, but also impact the economy.
This is why we generally see a single adjustment of interest rates between 0.25% and 1.0%. Once again, the central bank hopes to maintain price stability and does not want to see dramatic market turbulence.
The central bank’s preference for policy stability determines that substantial changes in interest rates will take a considerable amount of time. This period of time may be months or even years.
Just as traders like to collect and study data to provide a basis for the next transaction, the central bank likes to do similar work, but the central bank’s focus is on the entire economy, not just one transaction.
The central bank’s rate hike is like a brake, and a rate cut is like stepping on the accelerator, but keep in mind that consumers and businesses respond more slowly to interest rate hikes or interest rate hikes.
The time difference between changes in monetary policy and the actual impact on the economy is usually 1 to 2 years.