Monetary Policy Performance under Control of exchange rate and consumer price index

Abstract

Central Reserve announced the Monetary Policy Rate from 1955 to 2021 in different ways, and the central bank should be equally interested in the output of exchange rate and price stability. Besides having a stabilizing effect on the price level and trend of exchange rate stabilized the countries outputs. We find that monetary policy control; the price level does not affect production and exchange rate. Monetary policy is the only thing that can change the trend of exchange rate and Consumer Price Index. The actual policy was fixed exchange rate, and currency devaluations like Japan were quite successful for stability. The results indicate that the central bank can stabilize much of the macroeconomic indicators and disturbances under a monetary exchange rate and consumer price index system.