Federal Reseve

The Federal Reserve System

Matthew Myott

Economics and Change

Professor Sowell

The Federal Reserve sets the nation's monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. This is the Federal Reserve’s statement for January 28th is “the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power (reserve, 2015)”. This means that because the prices of the energy is going down that spending is rising because households can afford more. This means the committee is searching for maximum employment and stability. It is expected what they did because there is more cash flow throughout the economy creating more jobs and a more stable environment to foster job growth. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. This is the outcome and impact of their decision.

References

reserve, f. (2015). federal open market committee. Retrieved from federal reserve: http://www.federalreserve.gov/newsevents/press/monetary/20150128a.htm

Robert A. Collinge, R. M. (2004). Economics By Design. Upper Saddle River : Pearson Learning .