What are the monetary tools policy?
The Fed, Federal Reserve System, has three tools to use for its monetary policy. 1. Open Operations - buying or selling securities from the privite sector to control money supply.
2. Discount Loans - Setting discount rate that privite sector banks would need to pay the Fed to borrow money from them.
3. Reserve requirements - sets amount of money banks must have in their vaults in case customers come take money out.
The Fed's current monetary policy is price stability and implicitly controling inflation.
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