Monetary Policy refers to the actions taken by a central bank (like the Federal Reserve in the U.S.) to control the supply of money and credit in an economy. The goal is to influence economic activity, such as controlling inflation, promoting employment, and stabilizing prices.
Central banks use tools like adjusting interest rates or buying and selling government bonds to either speed up or slow down the economy. For example, lowering interest rates can encourage borrowing and spending, boosting the economy.