What monetary policy action occurred from 2005 to March 2008?

From 2005 to March 2008, monetary policy in many countries, particularly in the United States, focused on rate hikes. This period was characterized by a series of increases in the interest rates set by central banks in response to robust economic growth and rising inflation concerns.

By increasing interest rates, central banks aimed to curb inflation by making borrowing more expensive, encouraging saving over spending. This action was intended to cool off an economy that was experiencing significant growth, particularly in the housing market, where asset prices were rising rapidly. The Federal Reserve, for example, raised rates multiple times during this period, moving from 1.0% in mid-2004 to as high as 5.25% by mid-2006, before pausing the hikes.

In contrast, rate cuts would indicate a loosening of monetary policy intended to stimulate the economy, which does not align with the actions taken during this timeframe. Quantitative easing refers to the unconventional monetary policy of purchasing longer-term securities to inject liquidity into the economy, which was not a focus during this particular period. Currency devaluation involves reducing the value of a currency relative to others, which was not relevant in the context of interest rate decisions that dominated this timeframe.