Accommodative Monetary Policy

Dictionary Says

Definition of 'Accommodative Monetary Policy'

When a central bank (such as the Federal Reserve) attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). This is done to encourage more spending from consumers and businesses by making money less expensive to borrow by lowering the interest rate. Furthermore, the Federal Reserve also has the authority to purchase Treasuries on the open market to infuse capital into a weakening economy. 

Also known as an "easy monetary policy".
Investopedia Says

Investopedia explains 'Accommodative Monetary Policy'

The Federal Reserve adopted an accommodative monetary policy during the late stages of the bear market that began in late 2000. When the economy finally showed signs of a rebound, the Fed eased up on the accommodative measures, eventually moving to a tight monetary policy in 2003.

Related Definitions

  • Monetary Policy

    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. Monetary ...
    Read More »
  • Interest Rate

    The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual ...
    Read More »
  • Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central ...
    Read More »
    • Central Bank

      The entity responsible for overseeing the monetary system for a nation (or group of nations). Central banks have a wide range of responsibilities, from overseeing monetary policy to ...
      Read More »
    • Treasury Bill - T-Bill

      A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and ...
      Read More »
    • Push On A String

      When monetary policy cannot entice consumers into spending more money or investing in an economy, even if monetary policy is loosened to to put more money into peoples' hands. This term ...
      Read More »
    • Policy Mix

      A government's combined use of fiscal policy and monetary policy to attempt to manage the economy. Monetary and fiscal policies affect each other, and the right policy mix is supposed to ...
      Read More »

Articles Of Interest

Partner Links