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TeachMeFinance.com Accommodative Monetary Policy -- Policy implemented by the Federal Reserve to augment the stock of money that banks can dispose of for the purpose of lending. Also understood as 'easing the money supply', during which interest rates go down and people have an incentive to borrow so that there is an overall boost to the economy. An accommodative policy happens in a situation of a frail economy, high interest rate s and low prospect of inflation . Often a fall in interest rates may go far enough to worry the Fed about inflation and induce a tight money policy. See also monetary policy. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2007 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.