Monetary policy refers to the steps the Federal Reserve takes to control the money supply and interest rates in order to further economic goals.
Financial Policy.
- A country's central bank uses a variety of instruments known as 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.
Which three monetary policies are there?
- Reserve requirements, the discount rate, and open market operations are the three instruments the Fed has historically used to implement monetary policy.
For instance, policymakers use instruments like interest rates, reserves, bonds, etc. to manage the flow of money in order to increase employment, GDP, and price stability.
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