What was the primary monetary policy approach in the early 2000s?

The primary monetary policy approach in the early 2000s was characterized by a contractionary stance. During this period, central banks, particularly the Federal Reserve in the United States, were focused on controlling inflation and stabilizing the economy following the economic boom of the late 1990s and the dot-com bubble burst in 2000.

A contractionary monetary policy involves increasing interest rates to curb excessive spending and borrowing, thereby reducing inflationary pressure. The actions taken during this time included raising interest rates to counteract the growth of consumer demand and business expansion that could potentially lead to inflation.

This period was marked by monetary tightening, which aimed to ensure that economic growth remained sustainable and inflation was kept under control, aligning with the goals of central banks to maintain price stability.