A major factor in interest rate changes is the "monetary policy" of governments. If a government "loosens monetary policy", this means that it has "printed more money". Simply put, the Central Bank creates more money by printing it. This makes interest rates lower, because more money is available to lenders and borrowers alike. If the supply of money is lowered, this "tightens" monetary policy and causes interest rates to rise. Governments alter the "money supply" …
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showed last 75 words of 886 total
…on Current Economic Conditions by Federal Reserve District. June 11, 2004 <http://www.frbsf.org/education/activities/drecon/2003/0311.html>. Visited Publications and Resources Overview; Beige Book -Economic Research and Data from the Federal Reserve Bank of Kansas City. June 11, 2004 <http://www.wkkf.org/Knowledgebase/Pubs/ResourceOverview.aspx?CID=274&ID=3796> Retrieved from Financial Sense Online. June 11, 2004 <http://www.financialsense.com/resources/fed/fedwatch.htm>