Monetary policy refers to the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply, which in turn affects interest rates. It is a crucial tool for achieving economic objectives such as controlling inflation, managing employment levels, and maintaining financial market stability.
Tight money is a condition of the credit markets characterized by high interest rates, rigid underwriting standards, and scarcity of high loan-to-value loans. In such environments, it becomes more difficult for individuals and businesses to obtain financing.
