Administered interest rates impact economy speed differently, affecting monetary policy effectiveness.
The study looked at how changes in interest rates set by financial institutions in Singapore respond to changes in the main money market rate. They found that the speed at which these rates adjust varies depending on the institution and type of financial product. When rates are below their normal level, they adjust more slowly than when they are above it. This means that when the central bank raises interest rates, it takes longer for the effects to be felt in the economy compared to when they lower rates.