Monetary Policy

Monetary Policy
The branch of economic policy are usually managed by the central banks of the country and deals with managing the money supply, interest rates and financial conditions generally as part of the Bank / Government of the broad objectives of achieving high employment, healthy economic growth and low inflation (with priority to these goals different from country to country). In a deregulated financial system, such as prevails in many countries, the tools of monetary policy include open market operations by the central bank securities and foreign exchange market intervention. Pendulum tends to swing, between active and passive role in monetary policy. In the 1950s and 1960s governments tended to focus on fiscal policy - in price and income levels. Surging inflation in 1970 brought in a larger monetary policy is known as the control of monetary growth is generally considered a necessary if not sufficient, to control inflation. It did not turn out to be a cure-all or government coming to a mix of monetary, fiscal and wage policy keeps inflation under control and sustain growth.