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A: The three main tools of monetary policy used by the Federal Reserve are open-market operations, the discount rate and the reserve requirements. Through the use of these three tools, the Fed can manipulate market movements to exercise control over the economy.
Definition of 'Monetary Policy'. Tweet. Monetary policy is the macroeconomic policy laid down by the central bank. Definition: Monetary policy is the macroeconomic policy laid down by the central bank.It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.weet. Monetary policy is the macroeconomic policy laid down by the central bank. Definition: Monetary policy is the macroeconomic policy laid down by the central bank.