Monetary policy refers to the regulation of the money supply and interest rates by a central bank, such as the Federal Reserve Board ("The Fed") in the U.S., in order to control inlation and stabilize currency. When
monetary policy is accommodative, it is designed to stimulate economic growth by lowering short-term interest rates, making money less expensive to borrow. In contrast, tight monetary policy is designed
to curb inflation by reducing the reserves of commercial banks (and consequently the money supply, through open market operations).