TARGET RATE Meaning and
Definition
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The term "target rate" refers to a predetermined level or range of interest rates set by a central bank, which aims to guide and influence various economic factors within a country. It represents the desired rate at which financial institutions borrow money from the central bank, generally in the form of short-term loans. The target rate serves as a tool for monetary policy implementation and control, enabling a central bank to manage the money supply and achieve specific macroeconomic objectives.
The target rate is typically determined by considering numerous factors, including inflation, economic growth indicators, unemployment rates, and the overall state of the economy. By altering the target rate, central banks can influence borrowing costs for businesses and individuals, affecting investment levels, consumer spending, and inflation dynamics.
Central banks typically use open market operations, such as buying or selling government bonds, to adjust the target rate. When a central bank aims to encourage economic growth, it may lower the target rate, making borrowing cheaper, which stimulates consumption and investment. Conversely, if the central bank wants to combat inflation or stabilize the currency, it may raise the target rate to increase borrowing costs, which can dampen spending and investment and reduce inflationary pressures.
Overall, the target rate represents a strategic tool used by central banks to manage monetary policy and achieve specific economic goals by influencing borrowing costs and the overall availability of money within an economy.
Common Misspellings for TARGET RATE
- target rite
- target sate
- rarget rate
- farget rate
- garget rate
- yarget rate
- 6arget rate
- 5arget rate
- tzrget rate
- tsrget rate
- twrget rate
- tqrget rate
- taeget rate
- tadget rate
- tafget rate
- tatget rate
- ta5get rate
- ta4get rate
- tarfet rate
- tarvet rate
Etymology of TARGET RATE
The etymology of the term "TARGET RATE" can be broken down as follows:
1. Target: The word "target" originated from the Old French word "targette", meaning "small shield". It further traces its roots back to the Late Latin word "targeda", which signifies a "shield".
2. Rate: The word "rate" comes from the Old French word "rat", meaning "worth, quality, or proportion", derived from the Latin word "ratus", which indicates "considered or determined".
When combined, "target rate" refers to a specific level or value set as a goal or objective.
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