Accommodative monetary policy,
Definition of Accommodative monetary policy:
When the economy slows down, the Federal Reserve can implement an accommodative monetary policy to stimulate the economy. It does this by running a succession of decreases in the Federal funds rate, making the cost of borrowing cheaper. The Fed can also allow the money supply to increase or increase the money supply via quantitative easing (QE). Accommodative monetary policy is triggered to encourage more spending from consumers and businesses by making money less expensive to borrow through the lowering of short-term interest rates.
Accommodative monetary policy, also known as loose credit or easy monetary policy, occurs when a central bank (such as the Federal Reserve) attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). The policy is implemented to allow the money supply to rise in line with national income and the demand for money.
Central Bank policy that seeks to stimulate economic growth by loosening money supply. An accommodative monetary policy is typically characterized by a succession of decreases in the Federal funds rate which makes money easier (cheaper) for business to borrow. See Federal Open Market Committee (FOMC); Federal Reserve. Compare to Tight Monetary Policy.
How to use Accommodative monetary policy in a sentence?
- Accommodative monetary policy is when central banks expand the money supply to boost the economy.
- Monetary policies that are considered accommodative include lowering the Federal funds rate. .
- These measures are meant to make money less expensive to borrow and encourage more spending. .
Meaning of Accommodative monetary policy & Accommodative monetary policy Definition