Monetary policy

Monetary policies include Central Bank/government decisions on the rate of interest, the money supply and exchange rate. Monetary policies as fiscal can be two types: reflationary and deflationary. So both these policies are aimed to influence AD and its components. If government is seeking to increase AD, it is more likely to cut interest rates, because with low rates of interest, people will save less and so their marginal propensity to consume will increase, this will lead to an increase in a component of AD. Also low interest rates mean that it is cheaper to firms to borrow money and invest and so Investment is also might increase. With low interest rates foreign investors will not be interested in investing into the country because returns will be small and thereby this will make national currency less competitive and will lead to a fall in the exchange rates. With lower exchange rates exports will become more competitive and another component of AD might increase, while Imports will decrease because they become more expensive.
So, as we can see, monetary policies might influence all the components of aggregate demand and stabilize balance of payments by lowering or raising exchange rates. Another type of monetary policy is changes in money supply. By printing more money, government might make AD to rise, because people will have more money to spend. 

In the UK there is Monetary Policy Committee of the Bank of England which sets base rates with the main objective of achieving government’s target annual rate of inflation of 2%