Monetary Conditions Index - MCI
Categories: Econ
Somewhere between the moose and the maple syrup, Canada found time to create the world’s first Monetary Conditions Index (MCI), an indicator used to help central banks figure out what their monetary policy should be, as a kind of feedback loop.
The MCI is calculated using short-term interest rates and the exchange rate in forex markets to determine how tight or loose monetary conditions are. For example, the Fed could raise short-term interest rates, and then see how it affects the exchange rate of the U.S. dollar.
Besides central banks, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) also use the Monetary Conditions Index to track global tightness and ease of money.
Get it right, then get it tight.
The money—we’re talking about money. You can stop twerking.