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  1. Home
  2. /Glossary
  3. /Monetary Policy
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macro

Monetary Policy

How central banks manage money supply and interest rates to influence the economy.

Definition

How central banks manage money supply and interest rates to influence the economy. Loose policy (low rates, money printing) generally helps asset prices, while tight policy hurts them. The Fed's monetary policy is the most important factor for global markets.

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Related Terms

Federal Reserve (Fed)

The central bank of the United States that sets monetary policy.

Interest Rates

The cost of borrowing money, set by central banks and market forces.

Inflation

The rate at which prices rise and money loses purchasing power.

Basis Point

One hundredth of a percentage point (0.

CBDC (Central Bank Digital Currency)

A digital form of a country's official currency issued and controlled by its central bank.

Consumer Price Index (CPI)

A measure of average price changes for a basket of consumer goods and services.

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