Plain-English definitions for the terms you'll encounter on your financial journey.
A policy used to slow down economic growth or combat inflation by decreasing the money supply and raising interest rates.
A policy used by a central bank to stimulate the economy by increasing the money supply and lowering interest rates.
The interest rate at which depository institutions lend reserve balances to other depository institutions overnight. It is the target rate set by the Federal Reserve to guide monetary policy.
The central banking system of the United States. It is responsible for conducting monetary policy and maintaining the stability of the financial system.
Assets held on reserve by a central bank in foreign currencies to back liabilities and influence monetary policy.
Communication by a central bank about the likely future course of monetary policy to influence financial decisions.
A situation in which interest rates are so low that people prefer to hold cash rather than invest or spend. This makes traditional monetary policy tools ineffective at stimulating the economy.
The actions taken by a central bank to manage the money supply and interest rates. Its goal is to achieve macroeconomic objectives like controlling inflation and consumption.
A form of monetary policy in which a central bank purchases large-scale financial assets from the open market. This is done to inject money into the economy and lower long-term interest rates.
A form of monetary policy in which a central bank purchases large-scale financial assets to inject money into the economy.
A monetary policy used by central banks to decrease the amount of liquidity or money supply in the economy.