Corridor system used by most central banks to set rates
But methods vary widely depending on policy target and tools such as quantitative easing
Most central banks use a corridor system to ensure their policy rate holds in markets, but there is still a wide range of different approaches.
A corridor system sets bounds around the policy rate, with a deposit facility forming the floor of the corridor and a lending rate the ceiling. By varying liquidity in the system, the central bank can aim to keep actual rates close to the policy rate. The corridor ensures sudden changes in liquidity conditions do not lead to large swings in market rates
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