monetary policy

Definition

The regulation of the money supply and interest rates by a central bank, such as the Federal Reserve Board in the U.S., in order to control inflation and stabilize currency. Monetary policy is one the two ways the government can impact the economy. By impacting the effective cost of money, the Federal Reserve can affect the amount of money that is spent by consumers and businesses.

Use monetary policy in a sentence

The monetary policy was criticized as it was not operating in the best interests of the companies doing business there.

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Corporations often found United States monetary policy restrictive and instead would venture overseas for financial environments which were more forgiving.

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The change in the federal interest rate at different points in history were a direct reflection of the monetary policy of the Federal Reserve System, which changed the federal interest rate to improve or to stimulate the US economy.

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currency substitution Federal Reserve Bank