upcarta
  • Sign In
  • Sign Up
  • Explore
  • Search

# Monetary Policy

Follow
1 Follower
Monetary policy is the policy adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the m...

Monetary policy is the policy adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the money supply, often targeting inflation or the interest rate to ensure price stability and general trust in the currency.Unlike fiscal policy which relies on government to spend its way out of recessions, monetary policy aims to manipulate the money supply, i.e. 'printing' more money or decreasing the money supply by changing interest rates or removing excess reserves.
Further goals of a monetary policy are usually to contribute to the stability of gross domestic product, to achieve and maintain low unemployment, and to maintain predictable exchange rates with other currencies.
Monetary economics provides insight into how to craft an optimal monetary policy. In developed countries, monetary policy has been generally formed separately from fiscal policy, which refers to taxation, government spending, and associated borrowing.Monetary policy is referred to as being either expansionary or contractionary. Expansionary policy occurs when a monetary authority uses its tools to stimulate the economy. An expansionary policy maintains short-term interest rates at a lower than usual rate or increases the total supply of money in the economy more rapidly than usual. It is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that less expensive credit will entice businesses into expanding. This increases aggregate demand (the overall demand for all goods and services in an economy), which boosts short-term growth as measured by gross domestic product (GDP) growth. Expansionary monetary policy usually diminishes the value of the currency relative to other currencies (the exchange rate).The opposite of expansionary monetary policy is contractionary monetary policy, which maintains short-term interest rates higher than usual or which slows the rate of growth in the money supply or even shrinks it. This slows short-term economic growth and lessens inflation. Contractionary monetary policy can lead to increased unemployment and depressed borrowing and spending by consumers and businesses, which can eventually result in an economic recession if implemented too vigorously.

Show More
Overview Content 26 Creators 19
 Content
See all
  •  Most Recommended
  • Following
  • Recent
  • Fed Insider (Monetary System Deep Dive, Reverse Repo Demystified, Dollar Secrets Revealed)
    • Podcast episode
    • Aug 7, 2021
    by George Gammon and Joseph Wang
  • Taxing Wars: The American Way of War Finance and the Decline of Democracy
    • Book
    • Jun 1, 2018
    by Sarah Kreps
  • Thread by Isabel Schnabel: In my speech “Monetary policy tightening and the green transition” I discuss how the current macroeconomic environment, in particular painfully high inflation and rising interest rates, impacts the green transition and what this implies for monetary
    • Tweet
    • Jan 11, 2023
    by Isabel Schnabel
  • Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes
    • Article
    • Oct 21, 2022
    by Nick Timiraos
  • Thread by Matthew Pines: US national security & monetary policy seem to be increasingly working at cross-purposes. Now, we see the Fed & Treasury driving the USD up even as the WH/Congress push industrial policy & the Pentagon is increasingly focused on rebuilding the defen
    • Tweet
    • Sep 21, 2022
    by Matthew Pines
Channels
  • Fed Guy
    • Newsletter
    by Joseph Wang

You can submit a missing content, profile or collection under Monetary Policy.
  • Relevant Creators
  • Joseph Wang
    Follow
  • Sarah Kreps
    Follow
  • Mark Carney
    Follow
  • Annie Lowrey
    Follow
  • Neel Kashkari
    Follow
  • See all related creators
Related Topics
Bitcoin Economics Warfare Finance Politics Tax Europe Russia Central Bank Inflation
Deep dive into your favorite topics

Join to see curated content, creators and collections from your favorite topics.

Sign in with Twitter
  • upcarta ©2023
  • Home
  • About
  • @upcarta