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 ?
These are indeed important details for Pakistan to learn from, which is also suffering from an acute balance of payments/financial crisis, where prolonged use of tight monetary policy has not allowed country to grow and caused domestic debt to balloon, while the external debt has seen sharp increase at the back of virtually non-interventionist policy of SBP leading to fast slide of Rupee.
Continued cooperation with the IMF, which is a key assumption of the forecast, supported by a tight monetary policy will secure access to the international capital markets over the forecast horizon for both the private and public sectors.
"Russia's inflation, expected to average 2.8% in 2018, is below the target of 4%, driven by moderately tight monetary policy. However, it is projected to rise to 5.1% in 2019, supported by an ongoing recovery in domestic demand, higher fuel prices, and pass-through from the recent depreciation," the report said.
The central bank's tight monetary policy is one of the key reasons behind the private sector's falling demand for credit.
"The current tight monetary policy stance and macroprudential measures impact positively on inflation expectation," the statement said.
Summary: Central Bank says tight monetary policy stance will be maintained until there is significant improvement in inflation outlook.
The National Bank of the Kyrgyz Republic continued to maintain a tight monetary policy stance over the first nine months of 2013, according to the report of the International Monetary Fund prepared for the fifth review under the Extended Credit Facility following the discussions with the Kyrgyz government officials.
CII maintained that the current spike in inflation is a supply side phenomenon and therefore, a tight monetary policy would hurt growth while proving unequal to the task of tackling inflation.
After its most recent policy meeting, the CBR suggested that it no longer believes that a tight monetary policy has little impact on economic growth.
Summary: COLOMBO -- Sri Lanka's third-quarter economic growth slumped to 4.8 percent year-on-year, its weakest pace in nearly three years amid falling exports and tight monetary policy, data showed Wednesday.
However, the government views the tight monetary policy as a major drag on growth via a slowdown in industry, which faces higher costs of borrowings.
A tight monetary policy worsens the net worth of both the SMEs and large firms, with SMEs getting more hit on their cash flows, short-term borrowing, and revenues.