Central Bank Policy

Central bank policy refers to the strategies and actions taken by a country's central bank to manage the economy. This includes setting interest rates, controlling money supply, and regulating banks. The aim is to ensure stable prices, support economic growth, and maintain low unemployment. For example, by lowering interest rates, borrowing becomes cheaper, encouraging spending and investment. Conversely, raising rates can help control inflation. Central banks also act as a lender of last resort to banks in trouble, ensuring financial stability. Overall, their policies influence economic activity and the financial system's health.