Monetary policy
Monetary policy covers the tools a central bank uses to meet its objectives — in the United States, a dual legal mandate: price stability (a 2% inflation target) and maximum employment. The main lever is the policy rate; alongside it are quantitative easing/tightening (expanding or shrinking the bond balance sheet) and forward guidance (steering expectations through communication). A restrictive policy (high rates) curbs inflation at the cost of growth; an accommodative policy (low rates) supports activity at the risk of reigniting it. See hawkish / dovish for the two stances.
See also
The rate at which a central bank lends to commercial banks — the “rent on money.”
The 12-member committee that sets the US policy rate, 8 times a year.
The two monetary policy stances: restrictive (hawkish) or accommodative (dovish).
The communication through which a central bank announces the future direction of its rates.
Inflation excluding food and energy, which shows the underlying trend in prices.