Monetary Policies

Definition

Monetary policies are actions taken by central banks, such as the Federal Reserve, to manage and control money supply and interest rates within an economy with the goal of achieving macroeconomic objectives like stable prices, low unemployment, and economic growth.

Related terms

Interest Rates: Interest rates refer to the cost or price paid for borrowing money or using credit. They are a key tool used in monetary policy to influence economic activity.

Open Market Operations: Open market operations involve the buying and selling of government securities (bonds) by the central bank to control money supply and interest rates in the economy.

Reserve Requirement: Reserve requirement is the percentage of deposits that banks are required to hold as reserves, which affects their ability to lend and impacts money supply.