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 ?
Of those that tightened during the most-recent survey period, 25 percent required higher income standards to qualify, 12 1/2 percent required higher down payments, 37 1/2 percent required more stringent appraisal requirements and 50 percent implemented other tightening measures, with many banks taking more than one of these actions.
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 Port of Los Angeles already has tightened security as the result of past threats and will not be making any changes, said spokeswoman Julia Nagano.
Monetary policy had been tightened considerably in a series of steps starting in February, and much of the restraint stemming from those policy moves had not yet been felt in the economy.
Cablevision Systems Corporation Credit spreads have tightened over the last three months, with the five-year point tightening from 582 bps to 485 bps, a decrease of -17%.
Commercial banks in Poland have tightened business lending, the central bank said.
In early August, however, interest rates began to erase their previous declines, partly in response to the strong employment report, which generated expectations that monetary policy might need to be tightened substantially in the near term.
Apache Corporation (OIL & GAS/Oil & Gas Producers) Credit spreads have tightened over the last three months, with the five-year point tightening from 79 basis points (bps) to 71 bps, a decrease of -10%.
About 35 percent of banks had tightened loans to businesses in the fourth quarter, compared to 16 percent in the third quarter, the survey showed.
Chevron Corporation (OIL & GAS/Oil & Gas Producers) Credit spreads have tightened over the last three months, with the five-year point tightening from 53 basis points (bps) to 52 bps, a decrease of -2%.