#firstdealofthenewyearFateema * Interest Rates: Central banks manipulate interest rates to influence borrowing costs for businesses and consumers. Raising interest rates can curb inflation but may slow economic growth, while lowering rates can stimulate growth but risks higher inflation. * Reserve Requirements: Central banks set the percentage of deposits that commercial banks must hold in reserve. Increasing reserve requirements reduces the amount of money banks can lend, tightening credit conditions. * Open Market Operations: Buying or selling government securities in the open market to influence the money supply. Buying securities injects money into the economy, while selling them withdraws money. * Quantitative Easing (QE): A more recent tool where central banks purchase a wider range of assets, including corporate bonds or mortgage-backed securities, to inject liquidity into the market and lower long-term interest rates. * Forward Guidance: Communicating the central bank's intentions and likely future actions to influence market expectations.