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Home Categories Monetary Policy The Reserve Bank of India (RBI) is the central bank of India, The Sterling Overnight Index Average, or SONIA, is an index of very short-term unsecured loans between UK financial institutions. Rollback is the removal of the central bank’s quantitative easing policy, which is designed to stimulate economic growth. The Taylor Rule is a formula that links the central bank discount rate to inflation and economic growth. Tight monetary policy is an action taken by a central bank, such as the Federal Reserve, to slow overheated economic growth. The trilemma is an economic theory that states that countries can choose from three options when making fundamental decisions about their international monetary policy agreements. Expectancy theory predicts future short-term interest rates based on current long-term interest rates. The Vasicek Interest Rate Model is a one-factor short-term rate model that predicts where interest rates will be at the end of a given time period. Common sense says that interest rates are “pegged to zero”. That is, forcing rates below zero will not stimulate economic activity.