Contractionary or expansionary policy?

CFA Level I Economics
#1

Hello!

I have a question about contractionary/expansionary monetary policy. I am confused now.

In developing country there is a large interest rate increase (twice) but in the same moment central bank starts to flow large amount of money to the economy (earlier it wasn’t so available on the market).

so, what is this policy contractionary or expansionary? And how it could influence growth, inflation and other importants indicators?

Thanks in advance!

#2

Interest rate increases are contractionary; an increase in the money supply is expansionary.

The combination of the two could be anything: expansionary, neutral, or contractionary, depending on the relative effect of the two interventions.

#3

Thanks magician!)

#4

My pleasure.

#5

you can also see it as a stabilisation policy which will help stabilize the economy.