A central bank is said to be tightening an economy when it increases interest rates. The goals of tightening include managing growth, controlling inflation and reducing the amount of available credit.
Tightening Moves By The Federal Reserve
The tightening of monetary policy by the Federal Reserve in 1979, led by then-Fed-chairman Paul Volcker, broke the back of price acceleration in the United States, ushering in a two-decade long decline in inflation.
- The Effects of Tightening Monetary Policy. Small Business Chron.
- Alan Greenspan: Risk and Uncertainty in Monetary Policy. Federal Reserve.