Monetary policy refers to the macroeconomic strategy and actions taken by a central bank or monetary authority to regulate money supply, interest rates, and credit conditions in an economy to achieve specific economic objectives. The primary goals of monetary policy include price stability, full employment, and sustainable economic growth. Central banks implement monetary policy through various tools and mechanisms, such as open market operations, reserve requirements, discount rates, and forward guidance, to influence the money supply, borrowing costs, and overall economic activity. Expansionary monetary policy involves increasing the money supply and lowering interest rates to stimulate borrowing, investment, consumption, and economic growth during periods of recession or low inflation. Contractionary monetary policy, on the other hand, involves reducing the money supply and raising interest rates to curb inflationary pressures, cool down overheated economies, and maintain price stability. Central banks use monetary policy as a countercyclical tool to stabilize fluctuations in economic activity, mitigate inflationary or deflationary risks, and support long-term economic objectives, in coordination with fiscal policy measures and regulatory interventions.