Meaning & use
monetary policy
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Meaning
noununcountable
The actions a central bank takes to control the money supply and interest rates in order to influence the economy.
Grammar: Used as an uncountable noun: talk about monetary policy in general, not 'a monetary policy' unless you mean one particular policy.
Patterns
- monetary policy
- set monetary policy
- tighten monetary policy
- loosen monetary policy
The central bank meets next week to decide on monetary policy.
High inflation has forced a tightening of monetary policy.
Monetary policy alone cannot fix the country's economic problems.
Common combinations
- tight monetary policy
- A tight monetary policy can slow down borrowing and spending.
- loose monetary policy
- The government favored a loose monetary policy to encourage growth.
- monetary policy decision
- The monetary policy decision was announced after the meeting.
- conduct monetary policy
- The central bank conducts monetary policy independently of the government.
Commonly confused: monetary policy or fiscal policy?
monetary policy vs fiscal policy
Fiscal policy is about government taxing and spending, while monetary policy is about central bank actions on money and interest rates.
Practice
Which of the following is an example of monetary policy?
Choose one answer.
Monetary policy is carried out by a central bank and involves controlling money supply and interest rates. The other options are fiscal policy measures, which involve government taxation and spending.
Make it your own
Write a sentence using “monetary policy”, then check it and compare it with the examples above.