A policy that is applied by central banks in an attempt to stimulate economic growth by increasing money supply. Such policy is typically implemented through a series of decreases in the overnight interest rate (e.g. the fed fund rate) which makes money cheaper for businesses to borrow. To lower interest rates and increase the money supply, a central bank buys government bonds. An accommodative monetary policy curbs a rise in interest rates that would otherwise result when a government increases its deficit. This expansionary policy is particularly viable when the economy is operating far below its full potential and inflation is extremely low.

This policy is the opposite of a tight monetary policy.