What is the primary objective of monetary policy?

The primary objectives typically include maintaining price stability (controlling inflation), maximizing employment, and promoting sustainable economic growth.

Who is responsible for conducting monetary policy?

Monetary policy is primarily conducted by the nation's central bank, such as the Federal Reserve in the United States, the European Central Bank (ECB), or the Bank of England.

What are the key tools used in monetary policy?

Central banks use several tools, including adjusting interest rates (e.g., the policy rate), conducting open market operations (buying/selling government securities), setting reserve requirements for banks, and implementing quantitative easing or tightening.

How does an interest rate hike affect the economy?

An interest rate hike typically makes borrowing more expensive, which can reduce consumer spending and business investment, slow down economic growth, and help to curb inflation.

What is quantitative easing (QE)?

Quantitative easing is a monetary policy where a central bank buys large quantities of government bonds or other financial assets from the market to lower interest rates and increase the money supply, stimulating the economy.