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What is monetary policy? Definition and meaning
Monetary policy is the main focus of a central bank, it involves regulating the money supply and interest rates. The US Federal Reserve, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Canada, The Reserve Bank of Australia and other central banks manage monetary policy to control inflation, stabilize their country’s or region’s currency, and make sure the economy is moving in the right direction.
By regulating what effectively is the cost of money, a central bank can affect the amount of money that is spent by businesses and individuals.