tight money

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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 ?
One member, while acknowledging the downside risks to the expansion associated with potential developments in Asia, still was persuaded that the economy probably would continue to expand at an unsustainable pace and that monetary policy should be tightened promptly to avert a further buildup of pressures in already strained labor markets, associated increases in labor costs, and at some point an inevitable rise in price inflation.
In response to a question about whether banks' credit standards changed for approving mortgage applications from individuals to purchase homes, the vast majority of banks indicated no change, but 14 percent indicated that they tightened somewhat in the past three months, while 2 percent indicated that they eased somewhat.
The apex bank said, 'Private sector growth is now so strong that fiscal policy should be tightened, thus bringing the structural budget in balance over the next couple of years.
Nearly 70 percent of domestic survey respondents said they had tightened standards on C&I loans to small firms, a figure that was only slightly lower than that found in the October survey.
Stud nuts have to be tightened gradually and in the proper sequence to avoid bent and broken studs.
The case for a tightening, he told us, rested on the notion that "short-term rates likely will need to be tightened at some point to keep inflation in check.
The market hopes the Fed will go back to neutral after they've tightened.
On the negative side, large consumer debts were still viewed as likely to constitute an inhibiting influence on consumer expenditures, and many banking institutions had tightened lending terms and conditions at least for their more marginal consumer borrowers.
CDS on Goldman (reporting today) have tightened 8% over the past quarter, lagging the 12% tightening seen for the large US banks overall.
Credit standards for corporate loans were tightened further in the first quarter of 2013.
raids Thursday in Afghanistan and Sudan, security measures at Los Angeles International Airport were tightened and police said they would monitor the local situation for any potential problems.
The unexpected size of the monetary policy move in November, the economic news received over the period, and the growing expectation that policy would be tightened again before long all appeared to contribute to the dollar's rise.