"Discretionary policy" can refer to decision making in both monetary policy and fiscal policy. The opposite is a commitment policy. Monetarist economists in particular have been opponents of the …

Abstract The long-standing debate on whether monetary policy is best conducted under a regime based on rules or, alternately, in a framework where discretion prevails has yet to be settled. Indeed, it is a …

Discretionary monetary policy refers to the actions taken by a central bank or monetary authority that are not bound by pre-set rules or formulas, but rather are decided on a case-by-case basis in response …

The case where the central bank cannot commit is sometimes referred to as the case of discretionary monetary policy, or simply discretion. A general finding from literature on the subject is that the …

It shows that proposals for policy rules are largely based on empirical research using economic models. The models demonstrate the advantages of a systematic approach to monetary policy, though …

Dec 21, 2025 · It is commonly classified as either expansionary or contractionary. The Fed uses three main tools to implement its monetary policy: reserve requirements, the discount rate, and open market...

At one extreme of discretion, a monetary authority could have the full powers of the Fed (to buy and seil securities, set the discount rate, reserve requirements, and other regulations) and be given the …

May 18, 2025 · Explore rules vs. discretion in monetary policy: inflation, credibility, central bank independence, and economic stability explained.

Apr 8, 2026 · Monetary policy in the United States comprises the Federal Reserve's actions and communications to promote maximum employment, stable prices, and moderate long-term interest …

Nov 13, 2023 · Discretionary Monetary Policy: A monetary policy that adjusts according to current economic conditions, providing greater flexibility to swiftly alter interest rates or money supply.