Monetary Policy

The actions taken by a central bank to manage the money supply and interest rates in pursuit of economic objectives like stable prices, full employment, and moderate long-term interest rates. The Federal Reserve's monetary policy decisions -- particularly changes to the federal funds rate and quantitative easing or tightening programs -- are among the most powerful forces driving financial markets. Traders dissect every word of Fed statements, press conferences, and meeting minutes for clues about the future policy path.