Monetary policy reflects the use by government and government agencies (especially the central bank) of interest rate adjustments and other levers (such as various banking regulations) to influence the flow of new credit into the economy, and hence the rate of economic growth and job-creation. A “tight” monetary policy tries to reduce the growth of new credit (through higher interest rates); a “loose” monetary policy tries to stimulate more creditcreation and hence growth.
Monetary policy is the Federal Reserve’s primary job, which involves making sure that the banking and financial system functions smoothly and that the supply of money and credit from that system contributes to the nation’s economic goals.
Monetary policy is the management of the money supply and interest rates.