tight money

(redirected from Tight Monetary Policy)
Also found in: Dictionary, Thesaurus.
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 ?
will be closely monitored and the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook," the bank said.
2005) observed fall in domestic demand accompanied by low investment as a result of tight monetary policy.
According to reports, the auto industry analysts feel that the Reserve Bank is unlikely to pause on its tight monetary policy and the auto industry sees no respite even during the forthcoming festive season and expects further slowdown in sales in the months ahead.
The decision (not to hike interest rates) doesn't change Bank Indonesia's tight monetary policy bias in order to rein in inflationary pressures that remain high,' the central bank said, adding: 'Bank Indonesia will continue to watch inflation, and will adjust BI rate in a measured manner if necessary.
He said there was strong pressure from the IMF and the World Bank to control inflationary pressure by tight monetary policy that was hurting industrial growth in Pakistan.
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.
State bank officials said the period of tight monetary policy was over, and interest rates were set to fall through this year as the finance minister wanted to stimulate demand and investment, according to sources.
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.
Balcerowicz presided over the initial wave of economic liberalization in the early 1990s, when the economy was deregulated, prices were freed, many state enterprises were privatized, and the country battled inflation with a tight monetary policy.
Tight monetary policy and measures, such as liberalized imports of food and other essential items in short supply helped combat inflation.