Tight, or contractionary monetary policy is a course of action undertaken by a central bank such as the Federal Reserve to slow down overheated economic growth, to constrict spending in an economy that is seen to be accelerating too quickly, or to curb inflation when it is rising too fast.

The central bank tightens policy or makes money tight by raising short-term interest rates through policy changes to the discount rate and federal funds rate. Boosting interest rates increases the cost of borrowing and effectively reduces its attractiveness.