Monetary Policy & the Fed

The Federal Reserve's management of money supply and credit conditions — chiefly through open-market operations set by the FOMC, the discount rate, and reserve requirements — to pursue stable prices and full employment.

Easy money stimulates the economy and tends to lift stock and bond prices; tight money fights inflation and pressures prices down. Remember that monetary policy is the Fed’s job — Congress and the President have no direct role in it.

Related terms

Back to Knowledge of Capital Markets