Monetary Policy
🏦 Banking
Quick Definition
Monetary policy refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals.
Examples
- 1The Federal Reserve lowers interest rates to stimulate economic growth during a recession.
- 2Central banks increase reserve requirements for banks to control excessive lending and inflation.
- 3Quantitative easing is used to increase the money supply by purchasing government securities.
- 4Central banks setting negative interest rates to encourage spending and investment when conventional policies have been exhausted.
Tags
central-bankinterest-rateseconomic-policyinflationcreditinvestment
Related Terms
Other terms you might find helpful
Economic Growth
Economic growth refers to the increase in the production of economic goods and services, compared from one period of time to another.
Inflation
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Quantitative Easing
Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by increasing the money supply and lowering interest rates through the purchase of government securities or other financial assets.
Quick Info
Category:Banking
Difficulty:intermediate
Last Updated:6/19/2025