Monetary policy refers to the actions taken by a country's central bank, such as the Federal Reserve in the United States, to manage the money supply and interest rates. The primary goal is to achieve macroeconomic objectives like controlling inflation, maximizing employment, and stabilizing the currency. By adjusting interest rates and using tools like open market operations, central banks influence economic activity. Lowering interest rates can stimulate borrowing and spending, while raising them can help cool down an overheating economy. These decisions are crucial for maintaining economic stability and growth.