Monetary Policy and Central Banking

Monetary policy refers to the actions taken by a nation's central bank to control the money supply and influence interest rates, aiming to achieve economic stability and growth. By adjusting interest rates, the central bank can encourage spending and investment when the economy is slow or cool it down when inflation is too high. Central banks, like the Federal Reserve in the U.S., also regulate financial institutions to ensure the banking system's safety and reliability, which is essential for maintaining public confidence in the economy.