IntroductionMonetary policy is one of the many tools used by a national government to manipulate its financial system. Monetary policy refers to the method used by the financial authority of any country to control the supply and availability of money (Woelfel, 1994). It is often targeted at interest rates to achieve set goals oriented toward economic growth and stability (Woelfel, 1994). Monetary policy is based on the link between interest rates in an economy, that is, the relationship between interest rates and the total money supply. It uses various methods to monitor outcomes such as inflation, economic growth, exchange rates and unemployment. Monetary policy can either be an expansionary policy, in which case there is a rapid increase in the total money supply circulating in the economy, or a contractionary policy. in which case there is a slow increase or decrease in the total quantity of money circulating in the economy (Woelfel, 1994). The description of monetary policy takes the following approach: accommodative if the intention of the interest rates set is to stimulate economic growth, neutral if the intention is neither to combat inflation nor to stimulate growth economic, and strict if the intention is to reduce inflation (Woelfel, 1994). These goals can be achieved through a variety of tools, including increasing reserve requirements, increasing fiduciary interest rates, and decreasing the monetary base, depending on the desired outcomes (Woelfel, 1994). Monetary policy always aims to increase or decrease the quantity of money in circulation in the economy. Reducing interest rates encourages borrowing and thus increases the quantity of money in circulation. It is, however, a challenge when interest rates are... middle of paper...... full of increased taxes on their savings (Goodfriend, 2000). It is therefore fundamental that central banks promise the public that they will maintain some elements of quantitative easing even during the economic recovery in order to gain public confidence. Furthermore, adjustments to tax and spending instruments take longer and therefore may only be effective in neutralizing the zero bound in the long run, but not for the short-run effect as required in this case. The signaling channelThis channel, unlike the others, capitalizes on the formation of public expectations through a visible signal about the future policy intentions of the central bank. This channel is more of a visible sign of the commitment of central governments to maintain zero policy rates for a longer period. This channel requires central banks to demonstrate a remarkable willingness to break with previous conventional monetary policies..