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Finance Dictionary and Glossary of Investment Terms
Monetary Policy
Definition 1.
The actions of a central bank, currency board, or other regulatory committee, that determine the size and rate of growth of the money supply, which in turn affects interest rates.
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Definition 2.
Actions taken by the Board of Governors of the Federal Reserve System to influence the money supply or interest rates.
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Definition 3.
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.
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