Accommodative Monetary Policy

Federal Reserve policy to increase the amount of money available for Lending by Banks when the FED implements an accommodative policy it is known as easing the money supply during a. Period of easing interest rates fall making it more attractive for borrowers to borrow their by stimulating the economy the FED will initiate an accommodative policy when interest rates are high the economy is weak and there is little fear of an outbreak of inflation once interest rates have been lowered enough to stimulate the economy the FED may become concerned about inflation again and switch to a tight monetary policy