That boosts growth as measured by gross domestic product.
It usually diminishes the value of the currency, thereby decreasing the exchange rate.
It is the opposite of contractionary monetary policy.
Expansionary monetary policy is used to ward off the contractionary phase of the business cycle. The Fed's most commonly used tool is open market operations. That's what people mean when they say the Fed is printing money.
If monetary policy was widely seen as being highly contractionary in late 2008, the recession would have been far milder.
That’s because people would have demanded an easier monetary policy.
Monetary policy makers have three possible responses to the weak inflation data.
When business loans are more affordable, companies can expand to keep up with consumer demand.
However, it is difficult for policymakers to catch this in time. That's when the it buys Treasury notes from its member banks. By replacing Treasury notes with credit in bank coffers, the Fed gives them more money to lend.
Therefore, you will most often see expansionary policy used after a recession has already started. Banks reduce lending rates, making loans for auto, school, and homes less expensive.
The macroeconomic policies in most developed countries have shifted during 2010 and early 2011 towards a combination of monetary accommodation and fiscal austerity, while many developing countries have shifted to monetary tightening accompanied with relatively accommodative fiscal stances.
to deliver this keynote lecture on unconventional monetary policy measures.