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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.[1]

Tightening Moves By The Federal Reserve[edit]

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.[2]