Fiscal Policy
How a government uses taxes and spending to influence the economy.
In plain English
How a government uses taxes and spending to influence the economy.
Fiscal policy is the government's lever, as opposed to monetary policy, which is the central bank's. Cutting taxes or spending more pumps money into the economy; raising taxes or cutting spending pulls it out.
Big fiscal changes affect growth, inflation, borrowing and therefore currencies. Markets punish budgets they see as reckless, as the UK found in 2022.
Keep this word for good
Your free Private Swap Lounge saves the terms you’ve learned and quizzes you on them. Portal under construction. Expected delivery date is December 01, 2026.