accommodative monetary policy investment & finance definition
A policy of having low interest rates; a
central bank is attempting to stimulate economic growth by lowering short-term
interest rates. If interest rates are lower, more people and businesses may
borrow money, thus stimulating growth. The opposite is a tight monetary policy, which signifies
increasing interest rates. Accommodative monetary policy may also be referred
to as easy monetary policy.
See accommodative monetary policy in Wall Street Words
The Federal Reserve policy of increasing the supply of money to make credit more readily available. An accommodative monetary policy tends to lower interest rates, especially the short-term ones, at the time credit is made plentiful. Such a policy is likely to result eventually in increased inflation and interest rates. Compare
monetary policy.
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