10 Things To Know About Monetary policy

Monetary policy is like a strategy made by a central bank to control money and interest rates.

The main goal of monetary policy is to keep prices stable by controlling inflation.

Central banks use different tools, like buying and selling government stuff, to control the money available in banks.

The interest rate at which banks borrow directly from the central bank is called the discount rate.

Changing the discount rate can affect how much money banks lend.

Reserve requirements tell banks how much of their money they can lend out.

Monetary policy also wants to help create jobs and keep the economy growing.

Central banks use forward guidance to tell people what they plan to do with money in the future.

Sometimes, central banks use special methods like quantitative easing to help during tough times.

To make good decisions, central banks look at a lot of economic info like inflation, jobs, and what's happening in other countries.