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Economics vocabulary · Central Banks and Interest Rates

Tightening

Meaning in economics, with examples

/ˈtaɪtnɪŋ/nounCommon term

In economics, tightening means: A policy of making money and credit more expensive or harder to get, mainly by raising interest rates, in order to slow demand and bring inflation down.

In Turkish: sıkılaştırma, parasal sıkılaştırma

How it is used

Usually monetary tightening, but there is also fiscal tightening (tax rises or spending cuts). A tightening cycle is a series of rate hikes. The verb is tighten: the central bank tightened policy. The opposite is easing or loosening.

Example sentences

  1. After two years of monetary tightening, inflation has finally started to fall.

  2. Markets expect the tightening cycle to end this summer.

Common collocations

  • monetary tightening
  • tightening cycle
  • fiscal tightening
  • quantitative tightening
  • further tightening
  • rate hikeAn increase in the central bank's main interest rate, usually made to cool demand and bring inflation down.
  • easingA policy of making money and credit cheaper or easier to get, mainly by cutting interest rates, in order to support growth and employment.
  • hawkishFavouring higher interest rates or tighter monetary policy because controlling inflation is seen as the top priority.
  • monetary policyThe actions a central bank takes to influence interest rates, the money supply and credit in order to control inflation and support the economy.
  • creditMoney that banks and other lenders make available to people, firms or governments, which must be paid back later, usually with interest.

More terms: Central Banks and Interest Rates

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This page explains English vocabulary for learners. It is not financial advice.