tight money

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Related to Tight Monetary Policy: Accommodative monetary policy, Loose Monetary Policy

Tight money

When a restricted money supply makes credit difficult to secure. The antithesis of tight money is easy money.

Tight Money

A situation in which it is difficult to receive credit because of the monetary policy of the central bank. Tight money occurs when the central bank has enacted relatively high target interest rates. While this usually happens when the central bank is seeking to control or is concerned about inflation, tight money can negatively impact security prices and make it hard to receive a loan for a house or business.

tight money

A condition of the money supply in which credit is restricted and interest rates, consequently, are relatively high. Tight money generally has a negative effect on security prices, at least in the short run. Compare easy money.

tight money

or

dear money

a government policy whereby the CENTRAL BANK is authorized to sell government BONDS on the open market to facilitate a decrease in t he MONEY SUPPLY (see MONETARY POLICY).

The decrease in money supply serves to increase INTEREST RATES, which discourages INVESTMENT because previously profitable investments become unprofitable owing to the increased cost of borrowing (see MARGINAL EFFICIENCY OF CAPITAL

INVESTMENT).

Tight money policy, through MONEY SUPPLY/SPENDING LINKAGES, reduces AGGREGATE DEMAND. Contrast CHEAP MONEY.

References in periodicals archive ?
He said the tight monetary policy in our country has been the main factor for crowding out private sector from low cost credit facility.
Aware of the moderately loose tight monetary policy and rock-bottom level of interest rates, enterprises have stepped up issuance of corporate bonds recently.
The financial markets are now expecting China's central bank to take action and ease its tight monetary policy in order to encourage growth in the face of a dire global macro environment, a move that could boost interest in Chinese stocks.
Market sentiment was also dampened after Chinese Premier Wen Jiabao said at the World Economic Forum in Dalian, China, on Wednesday that his country, the world's second biggest economy, will maintain tight monetary policy to contain inflation and that the global economy will take a long time to recover, they said.
In 2011, countries have put the breaks on, there is tight monetary policy in China, there is tight monetary policy in India - because of high inflation.
According to the conventional views of monetary transmission mechanism, tight monetary policy is associated with a fall in the money supply and output.
I say this while looking back at nearly two years of the operation of a failed tight monetary policy.
I would not support a tight monetary policy in the current environment," Hoenig said in his written remarks.
Lou predicted that the Chinese government will probably not adopt a tight monetary policy until the second half of 2010 and said he assumes there will be two interest rate increases in the second half of 2010.
Finance Minister Palaniappan Chidambaram said 2007/08 growth could be below last year due to financial market turbulence, a possible slowdown in global output, tight monetary policy and high oil prices, but he added, "I am confident it will be close to 9pc.
Two bankers echoed the IMF's verdict on the Central Bank's autonomy, but economist and vocal Central Bank critic Elie Yachoui said the bank's tight monetary policy had been dictated by the government and had stunted the country's growth.
An interest rate of 4% is hardly signaling tight monetary policy.