Monetary Policy

Acommodative Stance

A central bank policy designed to stimulate economic growth by lowering short term interest rates, making money less expensive to borrow. also called accommodative monetary policy or loose credit. opposite of tight monetary policy.

Fed Funds Rate

In the United States, the federal funds rate is "the interest rate" at which depository institutions (banks and credit unions) actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis.

Open Market Operations

Open market operations are the principal tools of monetary policy. (The discount rate and reserve requirements are also used.) The U.S. Federal Reserve's goal in using this technique is to adjust the federal funds rate - the rate at which banks borrow reserves from each other.

Fischer Equation

The Fisher equation in financial mathematics and economics estimates the relationship between nominal and real interest rates inflation. It i

Nominal Interest Rate

The nominal interest rate (also known as an Annualised Percentage Rate or APR) is the periodic interest rate multiplied by the number of periods per year. For example, a nominal annual interest rate of 12% based on monthly compounding means a 1% interest rate per month (compounded)

Money Supply

There are several standard measures of the money supply, including the monetary base, M1, and M2. The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve).Jan 24, 2014

Money Demand

he demand for money is the desired holding of financial assets in the form of money: that is, cash or bank deposits. It can refer to the demand for money narrowly defined as M1 (non-interest-bearing holdings), or for money in the broader sense of M2 or M3.

Reserve Requirements

he reserve requirement (or cash reserve ratio) is a central bank regulation employed by most, but not all, of the world's central banks, that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves (rather than lend out).

Real Interest Rate

n interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower, and the real yield to the lender. The real interest rate of an investment is calculated as the amount by which the nominal interest rate is higher than the inflation

Prime Rate

the lowest rate of interest at which money may be borrowed commercially the lowest rate of interest at which money may be borrowed commercially

Discount Rate

the minimum interest rate set by the Federal Reserve for lending to other banks.