What Is Monetary Policy?

A country's central bank uses a set of instruments called monetary policy to regulate the total amount of money in circulation, foster economic expansion, and implement measures like adjusting interest rates and altering bank reserve requirements.

A nation's overall money supply is managed by monetary policy, which also aims to promote economic growth.

Interest rate changes and adjustments to bank reserve requirements are examples of monetary policy strategies.

It is conventional to categorise monetary policy as either expansionary or restrictive. The Federal Reserve frequently employs the discount rate, open market operations, and reserve requirements as its three primary monetary policy tools.

Controlling the amount of money in an economy and the channels through which it is provided is known as monetary policy.