Next video:
Loading the player...

Monetary policy is a central bank’s actions that influence the country’s money supply and the overall economy. In the United States, the Federal Reserve establishes monetary policy.  It tries to make sure the money supply grows neither too quickly, causing excessive inflation, nor too slowly, hampering economic growth. Ideally, inflation is 2% to 3% annually, which keeps prices stable. The Fed also tries to keep unemployment low, around 5%.

 

  1. No results found.
Related Articles
  1. Insights

    How Much Influence Does The Fed Have?

    Find out how current financial policies may affect your portfolio's future returns.
  2. Investing

    What's Tight Monetary Policy?

    A tight monetary policy constricts spending and curbs inflation.
  3. Insights

    Fiscal Vs. Monetary Policy Pros & Cons

    When it comes to influencing macroeconomic outcomes, governments have typically relied on one of two primary courses of action: monetary policy and fiscal policy.
  4. Trading

    How Do Central Banks Inject Money Into The Economy?

    Central banks inject money into the banking system, and remove money from it, through monetary policy actions.
  5. Trading

    Explaining the Federal Reserve System

    The Federal Reserve System is the central bank of the United States. It regulates monetary policy and supervises the nation’s banking system.
  6. Personal Finance

    What Does a Central Bank Do?

    A central bank oversees a nation’s monetary system.
  7. Trading

    Quantitative Easing

    Learn more about this monetary policy employed by central banks.
  8. Insights

    What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.
  9. Trading

    Open Market Operations Explained

    The term “open market operations” refers to a monetary policy tool in which central banks buy and sell bonds to regulate the money supply in the economy. The United States employs open market ...
Hot Definitions
  1. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  2. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  3. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
  4. Conflict Theory

    A theory propounded by Karl Marx that claims society is in a state of perpetual conflict due to competition for limited resources. ...
  5. Inflation-Linked Savings Bonds (I Bonds)

    U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, ...
  6. Peak Globalization

    Peak globalization is a theoretical point at which the trend towards more integrated world economies reverses or halts.
Trading Center