Definition: Central-bank actions intended to influence financial conditions and support statutory economic objectives, including the Federal Reserve's employment and price-stability goals.
Example
A change in policy rates influences broader borrowing conditions and can affect demand for housing.
Keep the distinction clear
Monetary policy is different from fiscal policy involving government taxation and spending. The Fed does not directly set every lender's mortgage rate.
Related terms
Discount Rate · Open Market Operations · Reserve Requirements
Keep studying
Primary and Secondary Mortgage Markets: Fannie Mae, Freddie Mac, and Ginnie Mae
References: Federal Reserve: open market operations · Federal Reserve: discount window
Pronunciation (US): MAH-nuh-tair-ee PAH-lih-see (capitals show stress)
Pronunciation reference: Merriam-Webster
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