Definition of Monetary policy:
Monetary policy consists of the process of drafting, announcing, and implementing the plan of actions taken by the central bank, currency board, or other competent monetary authority of a country that controls the quantity of money in an economy and the channels by which new money is supplied. Monetary policy consists of management of money supply and interest rates, aimed at achieving macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity. These are achieved by actions such as modifying the interest rate, buying or selling government bonds, regulating foreign exchange rates, and changing the amount of money banks are required to maintain as reserves.
Economic strategy chosen by a government in deciding expansion or contraction in the countrys money-supply. Applied usually through the central bank, a monetary policy employs three major tools: (1) buying or selling national debt, (2) changing credit restrictions, and (3) changing the interest rates by changing reserve requirements. Monetary policy plays the dominant role in control of the aggregate-demand and, by extension, of inflation in an economy. Also called monetary regime. See also monetarism.
Monetary policy, the demand side of economic policy, refers to the actions undertaken by a nation's central bank to control money supply to achieve macroeconomic goals that promote sustainable economic growth.
How to use Monetary policy in a sentence?
- Giving the flagging economy, the presidents top financial advisers were concerned about the pressure he was receiving to print more money, but decided to wait for the new monetary policy before questioning the commander in chief.
- I was interested in monetary policy because it determines our countries livelihood to a great degree, especially because our future is impacted by this as well.
- Monetary policy tools include open market operations, direct lending to banks, bank reserve requirements, unconventional emergency lending programs, and managing market expectations (subject to the central bank's credibility).
- Monetary policy can be broadly classified as either expansionary or contractionary.
- The monetary policy favored by the current government had lead the country to lessen their current spending while purchasing other countrys debt, allowing them to control inflation and increase their countrys savings.
- Monetary policy, the demand side of economic policy, refers to the actions undertaken by a nation's central bank to control money supply to achieve macroeconomic goals that promote sustainable economic growth.
Meaning of Monetary policy & Monetary policy Definition