Glossary · Macro · Monetary policy

Monetary policy

The central bank steering the economy by changing the money supply and interest rates. Expansionary policy (easing) lowers rates to lift spending in a slump, contractionary policy (tightening) raises them to cool inflation.

Also called: easing, tightening, expansionary monetary policy, contractionary monetary policy

Watch it happen step by stepTaught in: Central Bank Tools

Related terms

Central bank toolsMonetary policy transmissionOpen market operations (OMO)

More from monetary policy

Central bank credibilityDiscount rateForward guidanceInflation biasInterest on reserves (IOR)Liquidity trapLucas critique

Definitions are the start

See the term used, not just defined.

The full course teaches every term in context, with worked examples, interactive graphs and practice questions that remember what you get wrong.
Read the lessonStart the course