I. Introduction 3
II. Monetary policy 3
2.1 Monetary policy in theory 3
2.2 Central Bank 4
2.3 Applying monetary policy in recent years 5
III. Impacts of interest rate on the whole economy 8
3.1 Interest rate, savings and investment 8
3.2 Interest rate and export activity 9
IV. Conclusion 10
Facing a peak of interest rate in the end of 2012 as well as the bankruptcy of many small and medium enterprises, Vietnam was in emergency to adjust the monetary policy in order to balance the whole economy and promote production. Under the circumstance, the assignment is written to deal with three objects: monetary policy, central bank and interest rate. These three issues mentioned in this report have an intimate relationship with each other. That said, monetary policy is undertaken by the Central bank with the purpose of increasing or decreasing the interest rate (Milton, 1968).
In this paper, final outcome focuses on the impacts of interest rate, which has been modified by the Central bank through applying appropriate monetary policy. The assignment is also expected to become a reference for both policy makers in the macroeconomic views and businesses in changing strategies in complying with any movement of interest rate.
To achieve these outcomes set out in the immediately above paragraph, the writer tends to introduce some major issues of monetary policy and central bank in order to support for analyzing interest, including how each type of policy alters it and how it influences on the whole economy of Vietnam.
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