Mechanism - Transmission

: If people believe the central bank will keep inflation low, they may moderate their own price-setting and wage demands. 🦠 Disease Dynamics

: Lower rates often boost the value of stocks and housing, increasing household wealth and spending power. transmission mechanism

In economics, this describes how a central bank's policy decisions (like changing interest rates) travel through financial markets to impact businesses and households. Key Channels of Impact : If people believe the central bank will

: Affects the willingness of banks to lend; higher rates can reduce a borrower's net worth, making them appear riskier to lenders. making them appear riskier to lenders.