Evaluation of Monetary Policy and ESG Risk to Business

Project
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TABLE OF CONTENT
3 Evaluation of efficacy of monetary policy over last decade and the way central banks are
reviewing policy..........................................................................................................................3
4 Environmental, social and governance risk to business...........................................................4
REFERENCES................................................................................................................................6
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3 Evaluation of efficacy of monetary policy over last decade and the way central banks are
reviewing policy
Monetary policies are made by central bank of world in order to control supply and
demand of money in the market for better lifestyles of individual. As per Federal open market
committee reduction in interest rates will lead to increase in demand of products and services in
the economy thus resulted in more employment and outcome. Therefore FOMC has decided to
use federal fund as instrument for economic growth and development of world but in reality it
does not work effectively resulting in less number of employment and inflation within countries.
there is little difference in level of employment, output growth and inflation rates since decades
that shows strategy of FOMC has not worked effectively. Thus, such long financial crisis in
global economy has forced central bank to plan effective strategies to cope up with such
challenges (Ashworth, 2016). Central bank is taking continuous steps to reduce inflation rate and
promote economic growth and development so that people can live better and qualitative life.
Some of the measure of central bank has lead to distortion in few areas of capital market that
resulted in ineffective result. Thereby bank need to review its strategies and plan to evaluate
areas in which it lack that need to be improved for further growth and development of country.
Central banks has used different monetary policy tolls such as unconventional by analysing and
evaluating various financial crises that are faced by country. Bank has planned to expand
lending program, increased balance sheet to encourage effective flow of money and capital
within economic so that people can live better and healthy life. Banks are focusing on purchase
of large scale asset and investment from various individual to promote economic growth of
countries. Some of the countries have cut their interest rate to zero to increase investment in the
economic and flow of capital from one sector to another. As per report of international settlement
unconventional monetary policy tool used by central bank has resulted in positive outcome
through promoting growth and development within economy. It has reduces unemployment rate,
inflation rates and increase disposable income of customers thus they are some of the positive
impact of unconventional tool used by central bank (Levieuge, Lucotte and Pradines-Jobet,
2019). Most of the investors are ready to invest in various sectors due to low interest rates and
yield of maximum output thus lead to effective flow of money within economy. Central bank has
avoided deflationary spiral to large extended and central bank has set one of the objective to
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