What is Monetary Policy?

Simply put, monetary policy is a policy tool central banks use to control the available money and credit supply within the economy.

It’s that simple.

Now within monetary policy, a central bank like the Fed has various tools it can use to affect the availability of credit and money, that list ranges from:

• Changing interest rates
• Open-market-operations (buying and selling of government bonds)
• Discount windows
• QT & QE
• Increasing or decreasing the reserve requirements for banks, which is currently at 0%, just to name a few

If some of these terms were unfamiliar to you don’t pull your hair out.

The majority of these things will be clarified in this macro guide, and for those who go on to gain extreme value from this I’d highly recommend you check out ‘The Four Foundations of FX’

A straight path to clarity in macro.

I’ve spent 100’s of hours building, studying, and learning how to create a macro framework to understand what drives FX trends in macro.

I’ve compiled It all boils down to this.

Money Supply & Credit

Out of all the various monetary policy tools listed above, you’ll find that they aim to influence these two fundamental pieces of the puzzle, money supply and credit.