Federal Funds On The State Of The Economy Essay

Federal Funds On The State Of The Economy Essay
Mario Lamberto
ECON 201
10/12/2016
Federal Funds Rate
The Federal Funds Rate plays a huge role on the state of the economy in the United States. For
something that has such impact on the whole economy in the United States, it is very little known
and understood. The Federal Funds Rate may be the most important rate in the country. So what is
the Federal Funds Rate? It is an interest rate that is used when banks lend to other banks or other
depository institutions from "funds that are maintained at the Federal Reserve" (Target Rate). The
transaction can only be done overnight and by trustworthy institutions. The target rate is determined
by the Federal Open Market Committee (Target Rate). They will influence and determine the rate
that will be used. So if it doesn't have any first hand impact on a normal consumer or business, why
should anyone care about it? The answer to that is simple, the Federal Funds Rate will greatly
impact the economy in several areas and it will trickle down onto the normal consumer and
business. The Federal Funds Rate will change the economy if it goes up, and if it goes down. As the
year runs down, everyone will be watching with a close eye to see what the Fed will do with the
rate. The Federal Funds Rate will increase in December of 2016. Why will the Federal Funds Rate
increase by the end of the year? One reason to believe this is that the current chair Janet Yellen is
not afraid to do so, as she did it just a year ago which was the first in ten
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Federal Open Market Committee : Don 't Forget The Balance...
Fed Policy in 2017: Don't Forget the Balance Sheet
Throughout last year, the media were solely focussed on the differences of opinion on the Federal
Open Market Committee (FOMC) between the doves and hawks as being solely about the projected
increase in the federal funds rate. The baseline outlook proposed by Chair Yellen was for a glacial
trajectory, but this was always subject to alteration depending on the underlying tone of incoming
economic data. Since the financial crisis, however, US monetary policy has been underpinned by
two separate pillars: 1) asset purchases, and 2) a zero–bound federal funds rate. Divisions of opinion
between hawks and doves were evident before the onset of tapering asset purchases in 2014, and
they ... Show more content on Helpwriting.net ...
It was, however, also legitimate to ask whether the Fed was jumping the gun. Currently, the
economy is arguably at full employment and short–term interest rates are being normalised, albeit
gradually. The economic circumstances are, therefore, somewhat different to 2013. The policy of the
Fed towards ending reinvestment of maturing principle will be dictated by economic outcomes, the
same factors as to what will drive interest rate normalisation. Investors may worry that Fed will
make a mistake in trying to readjust the two pillars underpinning US monetary policy
simultaneously and, commensurately, increase the risks of tightening too quickly. The FOMC will,
therefore, closely monitor the behaviour of bond yields during 2017. Should yields spike and
financial conditions tighten then thoughts of balance sheet normalisation will be quickly shelved.
Additionally, the performance of yields will be affected by supply–demand factors, including
increased Treasury securities issuance to finance tax cuts and higher spending, thereby potentially
putting the Fed in a tight spot. Chair Yellen will not wish to convey the idea that, as a major player
in the government bond market, the Fed is bankrolling fiscal policy easing by continuing the
reinvestment of maturing principle. Rising bond yields under fiscal policy easing could, however,
raise mortgage rates that could upend the housing market.

Economics Reflection
. Through the process of reading, I learned many things about the economy. First of all, I learned
that it is a much more difficult decision to come to in regards of how much government involvement
in the nation's economy is enough, how much is too little, and how much is not enough. I also
learned that trying to keep the economy stable and productive is a constant and difficult struggle,
and that it is often difficult to even know what needs to or can be done in order to stabilize it. While
I find economics to be somewhat boring (I am a music major and largely emotionally driven, which
means that my entertainment is usually emotionally involving somehow), I actually enjoyed how
Wheelan explained economics in this book. While I would not read it for fun, reading this book as
an assignment was not painful.
Having government involved in the economy has its pros and cons. One of the Pros is that the
government can help prevent or discourage harmful behaviors or actions. Government regulation
can prevent man–caused shortages. Fishing regulations are often put in place to prevent overfishing.
These regulations prevent or discourage fishermen from fishing too much in one season, which
allows the fish to repopulate and remain available in the future. In the book, Wheelan mentioned
how the government can also tax bad behaviors to encourage behaviors that benefit health and/or
the environment. An example of this is a tax on gasoline and/or larger vehicles, or a tax on
cigarettes.

The Future Economic Outlook for America
The Future Economic Outlook for America according to Federal Reserve Assessments
Introduction Although business leaders may not have a crystal ball to help them plan for the future,
they do have access to a wide range of Federal Reserve publications that can help identify recent
and current trends and what these economists believe will take place in the coming months. Given
the lingering effects of the Great Recession of 2008 on the American economy today, identifying the
future economic outlook for America using this type of freely available information therefore
represents a timely and valuable enterprise. To this end, this paper provides a review of relevant
publications to identify the Federal Reserve's current assessment of economic activity and financial
markets, its current view about inflation and various monetary tools that have been used to stabilize
the economic and prices in recent years. Finally, an analysis of the economic outlook for the next
12– to 18–month period is followed by a summary of the research and important findings in the
conclusion.
Review and Analysis
Federal Reserve's Assessment of the Current Economic Activity and Financial Markets Generally
speaking, the Federal Reserve (hereinafter alternatively "the Fed") Board of Governor's current
assessment of economic activity across all of the Fed Districts is slow to moderate with the sole
exception of the St. Louis District which reported a decline in economic activity (Beige book,

FBR-Beige Book Summary
With the looming threat of an economic recession, action needs to be taken to try to minimize the
potential damage. Subprime loans to finance mortgage–backed securities have brought instability to
the real estate market. Banks have had to implement tighter lending standards to residential
mortgages to try to offset this instability ("FBR–Beige Book – Summary," 2007). Though several
banks have reported tighter credit conditions on the commercial real estate market, credit
availability and credit quality remained promising for most borrowers ("FBR–Beige Book –
Summary," 2007). Besides the turbulence in the real estate market, uncertainty in other financial
markets have had a minimal effect on recent economic activity ("FBR–Beige Book – Summary," ...
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Subprime mortgage loans issued by banks to finance mortgage–backed securities have led to a huge
increase in both housing prices and the quantity of houses being built. If housing prices climb too
high above their economic value, there will be no incentive for people to pay their mortgage.
Borrowers may decide to default on their housing loans, and this will lead to a crisis in the real
estate market which could result in a drastic decline of economic performance. The Federal Open
Market Committee has a target of decreasing the federal funds rate 50 basis points, from 5.25
percent to 4.75 percent, and also decreasing the discount rate 50 basis points from 5.75 percent to
5.25 percent ("FOMC Statement," 2007). The following graph can be used to show how an open
market purchase will impact the market for bonds and result in the desired rate

The Federal Reserve Board Is A Regulating Body That...
The Federal Reserve Board is a regulating body that determines how United States will lend money
by coordinating the banks and defining the value of the dollar. A Governor on the Federal Reserve
board communicates with the twelve region 's bank presidents, economic analysts, and their regional
directors, and collectively define the dollar by selling long–term and short–term bonds that advance
a percentage of the worth. Once an agreement has been made upon fraction percentage, banks are
required to maintain that stated amount in a Federal Reserve vault, or the bank's vault. The Federal
Reserve loans temporary funds to the banks that do not meet the reserve requirement in the form of
a short term loan, usually overnight. A large amount of the Federal Reserve Board's time is spent
discussing fractions of a percent on specific money–related rates which steers the economy.
THE UNITED STATES FEDERAL RESERVE 'S IMPACT ON THE ECONOMY
The Federal Reserve was created by an ACT of the U.S. Congress in 1913. Markets very often were
unstable due to the public having very little faith and trust in the private banking system, which was
self–evident during several periods in our countries history, most notable the run on the banks in the
1920s and 1930s. The Federal Reserve was created as an independent entity, however it is subject to
oversight from Congress, and Congress periodically reviews the Fed 's activities. The chairman
periodically appears before congress to outline and explain

Monetary Policy Of The United States And. How It Plays Out
Monetary Policy in the United States and
How it Plays Out in Today's Society
By: Jessica Garrett
MBA FINC 5103: Financial Services
Oklahoma Christian University
Submitted to: Prof. Mel Stewart
April 28, 2016
Monetary Policy in the United States and
How it Plays Out in Today's Society
Introduction
Monetary policy focuses on keeping interest rates at a modest level, keeping prices steady, and
keeping unemployment low. The Federal Open Market Committee is responsible for making the
necessary monetary policy changes. These changes influence both the markets within the United
States and the markets internationally. Currently, there is a lot of volatility within the markets, and
there is a lot of speculation about if and when the Federal Reserve will raise interest rates. There is
also speculation about whether a negative interest rate would work to get the economy back on
target. Also, many worry about whether the current government debt level will continue, and with
the number of people entering retirement increasing, whether there will be enough money coming in
to cover the costs of the social programs, such as Social Security and Medicare.
Monetary Policy The main goals of monetary policy are to have modest long–term interest rates,
steady prices, and the lowest level of unemployment. The Federal Open Market Committee is
responsible for setting the goal amount of the federal funds rate, which is the rate at which banks
can

The Effect Of Aggregate Demand On The Economy
As supported by the minutes released from the November meeting of the Federal Open–market
Committee, the economy continues to strengthen and looks as though it will remain healthy through
the foreseeable future. The economy has returned to normalcy in terms of Consumer Price since the
hurricanes hit Florida and Texas, as evidenced by the Consumer Price Index for All Urban
Consumers: Gasoline(all types) which is portrayed in the graph below. The FOMC has also reported
that inflation is projected to remain below the two–percent for at least the next two quarters. The the
inflation rate is expected to increase to two–percent by the medium term which will stabilize it at
the Fed's target goal. This growth in the inflation rate is demonstrated ... Show more content on
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The concern with the current slow growth of the Fed Funds Rate is that there is a similar pattern as
there was prior to the decline in 2008, where inflation tanked and the Fed Funds Rate, which was
high at 4.24% was not enough to halt the inflation drop. The similar pattern in inflation and the Fed
Funds Rate can be seen in the two graphs below. If the Federal Open Market Committee does not
increase the rate of the growing Fed Funds Rate within the next few quarters the likeliness of
another recession increases. Although it would not be as extensively damaging as the recession in
2008, a recession would be nonetheless detrimental to the economy, as we would be set back in all
the economical progress that has been made in the past 10 years, as shown in the graphs above.
Currently, the Federal Reserve has set the rate to rest at a target range of 1 to 1–1/4 percent. The
Federal Open Market Committee acknowledged in their November meeting that inflation has more
headway to make until it is at the two–percent mark they have set as a long term target. This
situation contains both positive and negative elements. A low inflation rate benefits consumer
confidence, because consumers are easily able to manage the gradual inflation and do not see
change reflected in day to day consumption since inflation rises slowly. However, with a low
Federal Funds Rate, and the potential for inflation to decline for any

Banking Act Of 1933 Essay
The Banking Act of 1933 was passed by the United States Congress on June 16, 1933. The Banking
Act of 1933 is also knows the Glass–Steagall Act, especially when referring to the principal
provision of separating commercial banks and investment banking. The term Glass–Steagall Act,
however, is most often used to refer to four provisions of the Banking Act of 1933 and only two of
those provision restricted or limited commercial bank securities activities and affiliations between
commercial banks and securities firms. That limited meaning of the term is described in the article
on Glass–Steagall Legislation. Which means, an act to provide for the safer and more effective used
of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into
speculative operations, and for other purposes. ... Show more content on Helpwriting.net ...
Roosevelt's New Deal program. It gave a tighter regulation of national banks to the Federal Reserve
System. This act was also enacted as an emergency response to the failure of nearly 5,000 banks
during the Great Depression. Which then led to another important provision which was the
establishment of the Federal Deposit Insurance Corporation (FDIC). The Federal Deposit Insurance
Corporation provided federal insurance on bank deposits. Members of the Federal Reserve System
was required to purchase FDIC insurance for their depositors by July 1, 1934. The deadline was
extended to July 1, 1936 by the Banking Act of 1935. Non–Federal Reserve commercial banks
could choose to purchase this insurance and most of all of them did. State banks were not eligible to
be members of the Federal Reserve System until they became stakeholders of the FDIC. The
purchase of the Federal Deposit Insurance Corporation insurance made banks subject to another set
of regulations imposed by the

Monetary Policy Provided By Federal Reserve System
Macroeconomic sentiment
Over the past couple of years we have seen a huge surge in stock markets (Chart#1). The main
reason for such moves is Quantitative Easing monetary policy provided by Federal Reserve System
since late 2008. Purchases were halted on 29 October 2014 after accumulating $4.5 trillion in assets
or 26% of GDP. The key outlook is tend to be consumer behavior, because households' spending
represents two thirds of GDP, which is broadest measure of economic activity. The job market is
considerably stronger right now. Since June last year, payroll employments expanded by $2.2
million jobs (Chart#2), which represents 2.4 percent annual rate of increase. As a result, incomes are
rising rapidly. For the same period real ... Show more content on Helpwriting.net ...
One more reason for such situation is recently surged value of the dollar.
Understanding the fact, that falling commodity prices and rising dollar cannot last indefinitely, and
maybe even bottomed out for now, I see a lot of perspectives within these markets in one year
period. Moreover, a lot of forecasters expect inflation to move toward two percent goal during this
year, which will result in substantial rise in commodity prices. Although, it is a controversial issue
according to the FED projections for the current and the next year, which have been lowered from
previous numbers (Table#1).
In this case, Fed is unlikely to tight money supply by increasing federal funds rate, which is
currently zero and is a frequently debatable topic. Such policy has a positive impact on a stock
market.
Securities–specific news
3D Systems Corporation (NYSE:DDD) represents one of the most innovative industry in recent
years and since its highs in 2014 has fallen more than fifty percent. Anyway, the company shows
steadily growing revenues as well as high liquidity ratios. Moreover, the five–year earnings per
share growth is at 21.67 percent, which gives investors benefits than other competitors can provide.
The company has manufacturing facilities in the United States, Germany, the Asia–Pacific, and
other European countries. DDD declared the buyout completion of Cimatron ltd., which is one of
the leading CAD/CAM software solutions providers and gives DDD a lot of

Fed Still Waits For The Right Moment
Fed Still Waits for the Right Moment
Ever since the first rise in the federal funds rate last December, the Federal Open Market Open
Committee (FOMC) has been repeatedly frustrated in its attempt to continue policy normalisation.
Firstly, tightening financial conditions in January forced the FOMC to embrace dovish policy
rhetoric. Markets subsequently declared victory over the Fed, but they consequently embraced an
overly–optimistic view about how monetary policy would unfold for the rest of the year. Secondly,
there was a clear deceleration in economic activity in Q1 that frustrated the more hawkish FOMC
members. Last week's policy meeting was, therefore, always going to be the earliest opportunity for
the FOMC to further raise its policy ... Show more content on Helpwriting.net ...
Recent survey–based measures have, however, displayed a sinister development, namely a tendency
for lower readings of long–term estimates. The University of Michigan has, for example, produced
estimates of consumers' inflationary expectations over the next five years since 1979. This measure
has fallen by over 50 basis points during the past year to 2.3%, the lowest reading since the survey
began. This development could consequently test the Fed's conviction about its 2% inflation target.
The Fed was unwilling to change its language about inflationary expectations in last week's FOMC
press release for fear of financial markets pricing rate hikes back out to 2017. So what conditions
are necessary to come into place for the FOMC to resume policy normalisation?
Tough Questions to Ask the FOMC
The Fed has a seemingly simple dual mandate of maintaining price stability, coupled with achieving
maximum sustainable employment. There are, however, other factors impinging of the FOMC's
conduct of policy. Members, particularly Chair Yellen, need, therefore, to clarify their position on
these important issues. The list is not particularly exhaustive. Firstly, markets need to know how
much policy weight the FOMC attaches to

Central Bank Of The United States
The Federal Reserve is the central bank of the United States, its structure combines centralization
with regional authority: including a Board of Governors in Washington D.C., a Federal Government
Agency, and twelve regional Reserve Banks. One branch in particular, the Federal Open Market
Committee, made of twelve Federal officials, is committed to fulfilling its ordinance from congress
to promote maximum employment, maintain stable prices, and moderate long–term interest rates.
According to the Federal Reserve System online, "The Federal Reserve, the central bank of the
United States, provides the nation with a safe, flexible, and stable monetary and financial system."
In order to do this, the Fed meets every six weeks to consider changes in interest rates, and may
have an unscheduled meeting at any time in between. The Fed's responsibilities rest in four
categories: monetary policy, financial intermediation through emergency liquidity (as the lender of
last resort), supervision of certain types of banks and other financial firms, and establishment of
payment system services to financial firms and the government. The primary method of monetary
policy is through open market operations and involves the purchase of existing U.S Treasury
securities. Through this type of purchase, the Fed increases the reserve base and thereby facilitates
the ability of depository institutions, banks, to make loans and expand money and or credit. The Fed
traditionally conducts these open

The Federal Reserve ( Investopedia ) Essay
In 1913, the United States Congress created the world's most powerful monetary system, called the
Federal Reserve (Investopedia). It involves one central agency and twelve regional Federal Reserve
Banks that are accountable for their designated areas in the United States (Investopedia). Its primary
purpose was to establish a secure, malleable, and a solid financial system which was to prevent
financial devastation during times of crisis (Investopedia). More specifically, prior to the creation of
the Federal Reserve Bank, the United States had bouts of crisis that created panic among the
citizens. In utter terror, people would withdraw their funds from their banks causing a domino effect
of financial institutions being pushed out of business due to a deficiency of money (stlouisfed).
Therefore, the Federal Reserve Act was endorsed as a resolution to crisis periods, providing a
money supply that would balance the economy, and introduce Federal Reserve Notes as a form of
new currency (stlouisfed). In essence, the Federal Reserve became fully responsible for developing
a comprehensive banking system that would allow for a strong economy. Therefore, one must
understand the structure, the function, and the future of the Federal Reserve Bank that continues to
financially secure this great country. First, one must understand the structure of the Federal Reserve
Bank that continues to financially secure this great country. Today, the Federal Reserve System is
comprised of

A Strange Anatomy Called Us Inflation Essay
A Strange Anatomy Called US Inflation
As part of its dual mandate, bestowed by Congress in 1978, the Fed is charged with the
responsibility of achieving so–called price stability. During the early years, there was some
ambiguity as to what this exactly meant, but, under former Fed Chairman Bernanke, it became
linked to the Federal Open Market Committee's (FOMC) 2% long–term inflation target. There are a
number of different measures of price pressures in the US economy, but the FOMC has always
focussed on those that affect households, namely the consumer price index (CPI) and the personal
consumption expenditure (PCE) deflator. The former uses fairly rigid weights on out–of–pocket
spending on good and services, while the latter will adjust the basket weights to take into account
product substitution by consumers due to price changes. The CPI will, therefore, not cover medical
care bills paid by employer–provided insurance, Medicare and Medicaid. By contrast, such items
are included in the PCE, thereby implying that the weight of medical care is significantly higher
than in CPI. Meanwhile, the other major difference between these two inflation measures is shelter,
which enjoys a much higher weighting in the CPI than the PCE. The FOMC has chosen the PCE as
its chosen inflation target, although there is some confusion as to whether members are monitoring
the headline or core measures. The CPI does, however, remain relevant: it is the benchmark measure
of inflation against which

The Federal Open Market Committee
Abstract
The Federal Reserve System has three branches: the Board of Governors, The Federal Open Market
Committee, and Reserve Banks. The Federal Reserve System (Fed) supplies and regulates America's
money to all the banks. The Board of Governors is the main authority of the three branches of the
Fed, and it supervises other banks. The Federal Open Market Committee is the most prominent
policymaker of the three branches and regulates the supply of money in the economy. Federal
Reserve Banks serve other banks, this is why they are called banker's banks. There are twelve
Federal Reserve Banks which represent different states and these "districts" share data for monetary
policies. The future role of monetary policy is vital ... Show more content on Helpwriting.net ...
Without the Fed, closing of banks would be ordinary because they would not receive money from
the System, allowing them to grant more loans and have more money in their reserves. Without the
lending power of the Federal Reserve System, our economy would suffer from lack of investment
and would not be the leading economic force it is today. The early American settlers had no need for
a central banking system. Barter was the form of payment for many years in America. Without the
Federal Reserve System, Americans today may still be using barter as a form of payment. Before
there was a banking system Americans paid for goods and services by trading cows or corn, or
another product that they grew from their land. Even on the prairies many pioneers used barter for
payment as opposed to coins and banknotes. It was not until urbanization, industrialization, and an
increase in population that the need for a larger quantity of money and and national banking system
arose. The country already had one form of currency, the next step was to produce more money and
establish more banks as to make these resources more readily available for all Americans. Many
early banks did not have the reserves to supply the surplus of money that was demanded or needed
to repay loans. When banks did not have this money they were forced to close and this created a
crisis called a bank panic. A particularly severe bank panic in

Federal Open Market Committee
Fed Changes Tact in Forward Guidance
The first Federal Open Market Committee (FOMC) meeting under Janet Yellen's leadership brought
a much anticipated format change in communication policy, as well as a widely discounted $10bn
reduction in monthly asset purchases. There was also abolition of the so–called Evans Rule, which
allowed some overshooting of the Fed's 2% long–term inflation target. Despite the new Fed Chair
trying her utmost to portray the policy outlook as dovish, financial markets were not entirely
convinced. Altering forward guidance was always going to be the biggest challenge in 2014,
particularly given the faster–than–anticipated decline in unemployment. Policy thresholds have been
abolished.
The emphasis of forward ... Show more content on Helpwriting.net ...
Unfortunately, the increased importance of policy language has increased the scope for
misinterpretation, as well as ambiguity. A hawkish view of future Fed policy can be taken from the
decision to abolish the Evans Rule, named after the President of the Chicago Fed. This formed the
bedrock of the policy thresholds. The Evans Rule was designed to tell markets that policy rate
settings would not change until certain economic conditions were satisfied. Consistent with its dual
mandate, the FOMC announced policy thresholds covering both unemployment and inflation. The
unemployment threshold (6.5%) always dominated the inflation equivalent (2.5%), even though the
Fed never had an explicit long–term target rate for unemployment. In contrast, the Fed has a long–
term inflation target of 2%. Under the Evans Rule, given that the threshold was above the target,
there was scope for inflation to overshoot. The abolition of the Evans Rule and the policy thresholds
now means that the 2% inflation target effectively becomes the ceiling. The importance of inflation
in setting the policy rate has increased: low interest rates will only prevail if inflation remains below
2%. This potentially marks an important shift in the Fed's thinking on the trade–off between
unemployment and inflation. Previously, Fed Chair Yellen believed the costs of overshooting the
inflation target were lower than those associated with elevated unemployment.
Rising Term Premium Undermines

The Pros And Cons Of The Federal Reserve
The Federal Reserve is in a whole the central bank of the United States. Congress created it to
maintain the American monetary system. This keeps everything in check and makes the US dollar
maintain a steady but healthy inflation rate. Woodrow Wilson signed the Federal Reserve Act into
law on December 23, 1913 which put a new system of government to work, The US Treasury. The
President always appoints the member of the Reserve, from members who are confirmed by the
senate. The current members of the Federal Reserve are as follows, Chairman Powell (Board
Affairs), Randal k. Quarles (Vice chair of supervision), and Governor Brainard (in other committees
in the Reserve). Some of these committees Brainard is present on include, Consumer ... Show more
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This committee has twelve members. Of these twelve members; seven are Board of Governors, one
is the President of the Federal Reserve Bank of New York, and the last four members are the four of
the remaining eleven bank presidents. The FOMC has eight meetings per year that are regularly
scheduled. Committee membership rotates at the first regular meeting of the year. This committee
discusses many things such as; the correct stance of monetary policy, economic and financial
conditions, and determines the risks to its long–run goals of price stability and economic growth.
The Board of Governors, consisting of seven members, serve a full term of fourteen years. One term
starts on February 1st, every two years. Any member who serves a full term cannot be re–elected,
and all terms end on their statutory date. The fist official Federal Reserve Board was sworn in on
August 10, 1914. The Board of Governors is responsible for watching over the Federal Reserve
Banks and focus on implementing the monetary policy. The current members of the Board of
Governors include; Jerome Powell (chair), Randal Quarles (vice chair for supervision), and Lael

Should The Fed Raise Interest Rates Now?
Finally, the process of normalization has begun, and seven years of zero interest rate cycle came to
an end in December 2015 with a hike of 25 basis point by the Federal Open Market Committee. It
was a much anticipated move for a while, and now the debate is on the roadmap of future interest
rate hikes. Several economist, analyst, and media personalities have expressed a variety of opinion
on both ends of the rate hike. Should the Fed continue to raise interest rates now, is the question of
global consideration. In my opinion, Fed should continue to raise interest rate now to help the
economy grow more independently and build up consumer confidence.
Some of my findings that support my opinion to raise interest rates now are below:
Economic Indicator's:
The US economy has recovered considerably from the great financial crisis of 2008. We are
currently in the seventh year of expansion, and the overall performance of the economy has been
satisfactory. Most economic indicators have improved dramatically, and some of them are at the best
level since then. A significant recovery in home prices, GDP, labor market, stock markets, auto
sales, and consumer spending have fostered the economic growth and restored the confidence of
market participants.
Major stock market indices globally are trading near the high levels of 2007–2008. Some countries
like India have surpassed the previous highs of 2008, and are trading comfortably higher (^BSE, Jan
2008: 20,000 approx.; May 2016: 25,000

Financial Management : Key Performance Metrics
Section 1 Financial management encompasses a broad array of different methodologies, key
performance metrics, and news and events, amongst many other segments. From the smallest of
public companies, to global giants, data is continuously compiled and analyzed to gauge
performance and predict future trend. Of course, these studies can never be completely accurate, as
market performance is unpredictable and sometimes quite volatile. It's because of the unknown that
the constant fluctuation of individual stocks and overall markets is present. These fluctuations are
tied to many different factors, including the key data that companies release. It's from this data, such
as annual reports, that analysts can gauge the performance of the company and investors can decide
the fate of the share price from the buying and selling activities they perform. Other events also play
a major role in the markets and in the overall examination of financial management, such as initial
public offerings and secondary offerings, and these instances provide fuel to an already complicated
system of gauging and predicting the market. Truly, the factors used to analyze a market are
limitless. Even extraneous variable, such as bond yields, are used to predict future market
movement. In the below detail, some of the general facets of financial management and market
analysis will be examined. Our discussion of the issues of financial management for the scope of
this project have been directed at the major

The Federal Reserve System: First Report
Introduction:
The Federal Reserve System is the most powerful institution in the United States economy.
Functioning as the central bank of the United States, acting as a regulator, the lender of last resort,
and setting the nation's monetary policy via the Federal Open Market Committee, there is no
segment of the American economy unaffected by the Federal Reserve [endnoteRef:1]. This power
becomes even more substantial in times of "unusual and exigent circumstances," as Section 13(3) of
the Federal Reserve Act gives authority to the Board of Governors to act unilaterally in lending and
market making operations during financial crisis[endnoteRef:2]. As illustrated by their decision
making in the aftermath of the 2007–2008 Great Recession, ... Show more content on
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As Hamilton had written several years prior, in Federalist 23, "the means ought to be proportioned
to the end[endnoteRef:20]." In his estimation, the Constitution included "express powers",
specifically enumerated, and implied powers, derived from the breadth of the text and the Necessary
and Proper Clause. These implied powers had been supported even by Madison, in Federalist 44,
where he argued that Congress had additional means to act in the interest of the ends they were
pursing.[endnoteRef:21] In his understanding of the Constitution, Hamilton believed the necessary
and proper clause, reading "The Congress shall have the power... To make all laws which shall be
necessary and proper for carrying into execution the foregoing powers, and all other powers vested
by this Constitution in the government of the United States, or in any department or officer
thereof[endnoteRef:22]" created implied powers and allowed Congress to charter a national bank.
[20: Hamilton, A., Madison, J., & Jay, J. (2005). The Federalist Papers. New York: Signet Classics,
an imprint of New American Library, a division of Penguin Group (USA).] [21: Chernow, R.
(2005). Alexander Hamilton. New York: Penguin Books. (Page 353)] [22: The Constitution of the
United States of America. (1787). Washington, D.C.: National Archives and Records

Federal Reserve: The Roles Of The Federal Open Market...
The Federal Reserve is the Central bank of America and act as the lender of last resort. The central
bank was founded in 1913 by the then elected members of congress. The Federal Reserve board is
comprised of 12 members. The head of the Federal Reserve is the board of governors. Janet L.
Yellen is the current Chair of the Board of Governors of the Federal Reserve. Janet Yellen also
serves as Chairman of the Federal Open Market Committee which makes up part of the central
bank, the System's primary monetary policymaking body. The 12 governor's represents the major
regions in the country? Seven of the 12 member are on the FOMC board who is appointed by the
President and confirm by the Senate. Each member serves 1 year, but can serve up to 14 terms
depending on their appointment to the board. One of the members on the Board also serves as the
Chairman of the FOMC whose headquarters is in New York City. ... Show more content on
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The CB uses open market operations to buy and sell securities as a means of implementing their
monetary policies. They also used the open market operations as a way to control the liquidity of
available money by influencing the short term interest and the supply of base money; therefore as a
result controlling the supply of money. They also set the target rate for the feds and setting the
discount rate at which for member banks to lend money to each other. The Feds also evaluate the
bank mergers and also implements foreign exchange policy on behalf of US government and the

Interest Rate Hike : A Reflection On The Present And Future
Interest Rate Hike: A Reflection on the Present and the Future
Xiaosheng (Olivia) Yang
Introduction
At December 16, 2015, the market witnessed the first time that the Fed hiked the interest rates since
2006. Federal Open Market committee (FOMC) lifted the target range for the Federal funds rate to
¼ to ½ percent. Initially, this paper outlines the core marks from December 2015 meeting statement
and compares them to the one from January 2016 meeting statement. Later, this paper acclaims
Fed's decision and illustrates appurtenant reasoning, based on multiple data sections ranging from
labor market, price level, and economic condition. Then, this paper characterizes market
performance in the aforementioned sections after the rate hike and deduces how it impacts rate
decisions down the road. Eventually, the paper provides a conclusion using facts from current
events, newly released Fed Chair Speech, and the analysis of alternations in FOMC voting members
so as to determine further possible movements of interest rate.
A Comparison between December 2015 and January 2016 FOMC Statements
With strong labor market performance and confidence about medium–term realization of inflation
target (2%), FOMC determined to raise the FFR range to ¼ to ½ percent in the December 2015
meeting. However, FOMC maintained the same FFR range in the following meeting. Moreover,
there were four aspects regarding the economy that FOMC might examine and elaborate for the two
previous decisions.
To

September Federal Open Market Committee
December Fed Rate Hike Remains in Play Many observers believed that the 27–28 October Federal
Open Market Committee (FOMC) meeting would be a non–event, largely due to the fact that there
was no scheduled press conference after its conclusion. In fact, the press statement revealed some
interesting insights into the current line of thinking of FOMC members. Most importantly, it is
abundantly clear that the vast majority are still inclined to raise the federal funds target at the 15–16
December policy meeting. I have recently written about rising dissent on the Board of Governors,
notably the views of Governor Lael Brainard. It appears that her openly questioning the policy
apparatus of Fed Chair Yellen has yet to sway the opinions of other ... Show more content on
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FOMC Sets a Low Bar The willingness of the FOMC to contemplate an increase in the federal
funds target despite mediocre economic data would indicate that the bar has been set fairly low.
Prior to last week's policy meeting, there were 3 potential scenarios for the Fed. Firstly, monthly
non–farm payroll gains in October and November in excess of +200K would guarantee a rate hike at
the December policy meeting. Secondly, monthly job gains over the aforementioned period of
+150K would probably have deferred the lift–off point until March 2016. Finally, further slowing of
non–farm payroll growth to +100K per month in October and November, along with other data
corroborating weaker expansion, would have pushed tightening deep into 2016. The arrival of a
lower tightening bar may be due to the influence and gravitas of Fed Vice Chairman Fischer who
seems to be the keenest FOMC member to raise the federal funds target in 2015. Markets are,
however, reluctant to completely embrace a December rate hike, because the Fed has previously
backed away from policy proclamations. Thus, the credibility of the FOMC's policy statements is
now being constantly put under the surgeon's knife. While it is abundantly clear that December is
the preferred lift–off point for the federal funds rate, there are potential circumstances that could,
once

The Federal Reserve And Financial Crisis With The United...
The Federal Reserve and Financial Crisis with the United States:
Strategical Economic Decision Making in the Face of Crisis
Historical Structure of the Federal Reserve
In the year 1776, the Continental Congress adopted the Declaration of Independence, which
proclaimed that the new United States of America would govern independently from Great Britain
and it's King. Prompted by unfavorable social protocols, economic policy, and biased tax principles,
America began its journey of self–regulation. With America 's population growing in size, mobility,
and economic activity, the assortment of banks and money soon grew hectic and unmanageable.
Prior to 1913 America was plagued with financial unrest. These times were characterized by
economic crises that caused the American people to panic, race to their banks, and withdraw their
deposits. Lack of regulation resulted in widespread bank runs that produced a domino; taking the
stability of the economy down one bank at a time. These situations proved detrimental because there
was no lifeguard, so to speak, to lend a hand when uncertainty overshadowed reason. After enduring
a severe crisis in 1907, Congress took initiative and created the Federal Reserve Act of 1913.
The Federal Reserve System, initially created to subdue banking panics, has now adopted numerous
responsibilities like encouraging a sound banking system and a healthy economy. To delegate these
responsibilities, the FED has been divided up into a power diffusing

Prospects For The Us Economy
Prospects for the US economy in 2016 November 6, 2015 The US economy is likely to grow by
2.7% in 2016, but developments abroad pose risks Despite the recent softness in high–frequency
data, the economy is close to full employment and growth is likely to average 2.4% in 2015. It
should accelerate slightly in 2016, as the buoyant labour market will boost private consumption,
offsetting some of the weakness in the industrial and trade sectors. Federal Reserve (Fed) officials
have highlighted the external headwinds posed to the US economy by slowing growth in emerging
countries and a continued debt overhang from the financial crisis. What next Real GDP is likely to
grow by 2.7% in 2016. It might slow towards year–end, winding down ... Show more content on
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Car sales got a large boost, up to an annualised rate of 18.1 million units in September.
[***GDP_chart***] The housing sector is recovering and residential investment will continue
contribute positively to GDP growth. Housing starts have topped an annualised rate of 1 million for
the past five months. Existing home sales have declined recently, but they have been above
expectations for most 2015. The recent acceleration might not be supported in the medium term
because of limited supply and affordability constraints. Lower oil and gas prices are not as
stimulative for the US economy today as they once were due to the negative impact on the oil and
gas industry that has grown rapidly in recent years. The oil and gas rotary rig count is at a post–
recession low of 795, less than 50% than the peak of active rigs a year ago (see today 's
PROSPECTS 2016: Global oil market). Low oil prices are weighing on investment and employment
plans of corporates in the energy sector; they will remain a restrain in 2016. Equipment investment
should stay upbeat, as testified by strong shipments. Some risks are posed by the foreign growth
outlook and tightening financial conditions, which could restrain investment growth in the second
half of next year. The main drag to third–quarter growth came from contracting inventories, whose
quarterly change fell to 56.8 from 113.5 billion dollars, the largest swing in four years. The
inventory

Company 's Stock Movement And My Personal Opinion Essay
On the last Stock Market game, i chose four companies as my targets(Apple, Google, Pandora and
Fitbit inc), but this time i added two more companies:KBH and SONS. In this financial journal,i
will record each company's stock movement and my personal opinion. On my research(from
marketwatch.com), Treasuries prices rose for a fifth straight session on Friday, in line with gains in
European sovereign markets, as investors continued to snap up U.S. government bonds with the
expectation that the Federal Reserve will undertake fewer rate increases this year. The Dow rose
120.81 points Friday, or 0.7 percent, to 17,602.30. It is up 1 percent for the year. The S&P 500
gained 8.99 points, or 0.4 percent, to 2,049.58, and is now up 0.3 percent for 2016. The Nasdaq
composite picked up 20.6 points, or 0.4 percent, to 4,795.65, though the Nasdaq remains down 4
percent for the year. As i know,the biggest gainers on the last Friday were Health Care and Banks.
Fortunately, my own stocks are all technology companies. Treasury yields fell on Friday and posted
their first weekly declines in five weeks as investors bid up prices following the Federal Reserve's
decision to keep rates unchanged. The benchmark has noticed 10–year Treasury yield declined in all
of the past five sessions, with the biggest pullback coming on Wednesday after the Federal Reserve
surprised investors by leaving rates unchanged and cutting its forecast for the number of rate hikes
this year to two from a prior

Federal Open Market Committee (FOMC): The Global Financial...
There has been a notion that financial crises are "black swan" phenomenon, which do not happen
often at all. This notion, unfortunately, is absolutely a myth. In the last forty years alone, there have
been a total of thirty financial crises worldwide. Even though our project is only concerned with the
economy growth in the U.S., the concept of borderless has existed for a long time. A financial crisis
happens in Europe can have a very clear effect on the rest of the world, and vice versa. The Federal
Reserve (the Fed) has always reacted accordingly, though at times more appropriately than others.
Along with other tools, the Fed relies heavily on the adjustment of the Fed fund rate through the
Federal Open Market Committee (FOMC). This is the ... Show more content on Helpwriting.net ...
Simply speaking, if the rate is high, firms will find their returns on investments increase
domestically. That, in turn, creates a higher demand for the U.S. currency. Effectively, the exchange
rate also increases. It pushes the dollar value higher compared to other currencies. So even if there
has been nothing changed in the input of a firm, the output now all of a sudden becomes more
expensive in the countries where it exports its products to due to the new exchange rate. Export is
reduced for that reason. As of for import, other countries would be very happy to see the change in
exchange rate. Their products now are cheaper making import value goes up. As we now, the net
exports equals export minus import. Export goes down and imports go up means net export goes

The Federal Reserve Open Market Committee Essay
Recently, the Federal Reserve Open Market Committee (FOMC) strongly floated the idea of another
interest–rate hike, with the last one being a very minor one after seven years of 0% short–term
interest rates. (CITE) While the decision to raise rates may be a foregone conclusion, it is important
to note the various effects such a hike will have on the economy as a whole. Everything from the
housing market to debt markets to emerging markets will be affected. The ripple effect from such a
decision could affect the economy for years to come. With all of these factors in mind, I believe that
the Federal Reserve should raise interest rates now. Simply put, the level of interest rates affect
economic decisions at every level, whether by the individual consumer, or a major corporation, or
entire countries. First, we must look at the residential and commercial real estate market.
Homeowners had a golden opportunity to purchase or refinance their homes between 2008 and
2015, when 30–year rates were at unusual lows. (CITE) This was of particular help when many
homeowners suffered through "underwater mortgages" on homes worth less than the mortgages
owed. Refinancing at a lower interest rate ensured millions of afflicted homeowners would be able
to reduce their interest payments during such a troubling economic period. (CITE) But given the
Federal Reserve's likely decision to raise rates, homeowners will be at a disadvantage. The most
recent (as of 12/9/2016) average 30–year fixed

United States : Interest Rate Hike
UNITED STATES: Interest rate hike UNITED STATES: Interest rate hike grows in uncertainty US
interest rate hike grows in uncertainty Global volatility may delay the pace of the Federal Reserve 's
normalisation of monetary policy EVENT The Federal Open Market Committee (FOMC) of the
Federal Reserve (Fed) meets on September 16 and 17, in what will be one of the most awaited
meetings in recent years. SIGNIFICANCE The chance of a rates lift–off at this meeting has receded
recently and currently stands at 32%, as anticipated by the Fed Funds futures ***THIS SHOULD
BE CHECKED DAY OF BY APPROVER OR FRANCESCA*****, due to heightened financial
markets volatility and global economic sluggishness. The chances of a December hike are higher, ...
Meanwhile, the FOMC will have more time to assess whether the factors that have held back
inflation, the strong dollar and low oil prices, are fading. Analysis Early this year, GDP growth
stagnated because of transitory factors (harsh winter weather and the West Coast ports disruption)
and inflation declined due to the dollar appreciation and a fall in the oil price (see DB198755). For
most of the year, the dominant view within the FOMC members has been that the slowdown in both
growth and inflation was temporary and that it would fade away as the year progressed. CALLOUT:
3.7% Annualised second–quarter real GDP growth This prediction proved right for growth, as
second–quarter GDP growth rebounded to 3.7%
[http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm]. However, inflation has stayed
low. The July FOMC minutes
[http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20150729.pdf] first raised doubts
about this view, highlighting how the recovery might be incomplete, due to slowing global growth,
while financial conditions have tightened due to the China–led equity sell–off. At that meeting,
almost all members would need more evidence to be reasonably confident in the inflation outlook's
improvement. [***US_GDP_chart***] Recent developments – h2 In August, a major global event
clouded the outlook further: the People 's Bank of China (PBoC) introduced changes to the renminbi

Fomc Members Keep March Rate Hike Alive. Market-Based...
FOMC Members Keep March Rate Hike Alive Market–based probabilities for an increase in the
federal funds rate at this month's Federal Open Market Committee (FOMC) meeting have recently
surged. Originally, the emergence of hawkish views from two regional Federal Reserve Bank
Presidents, namely John Williams (San Francisco) and William Dudley (New York), along with,
more recently, Fed Chair Yellen have produced a significant resetting of expectations. The FOMC
has become an extremely democratic institution over the past two decades. Consequently, members
do not feel any inhibition about conveying their policy views in the public domain. It is, however,
important to remember that not all FOMC members carry the same clout at any given meeting. ...
Ideally, members would like to see lower levels of U6 labour market underemployment, but they are
also cognisant of the need to make a pre–emptive strike against a build–up in inflationary pressures
without damaging labour demand. Fed officials have been warning financial markets to expect a
faster pace of tightening in 2017 versus last year. Policy changes need, however, to be put into
context. The FOMC's current baseline economic outlook would suggest 2 or possibly 3 rate hikes
during the year. These would happen in June and December, along with September if there are 3
hikes. Meanwhile, markets have become jittery about whether the FOMC plans to boost the number
of rate hikes this year. Ultimately, unfolding economic data will determine any changes to the
FOMC's baseline economic outlook, and, consequently, the forward policy path. To justify an
increase in the federal funds rate being brought forward from June to March, the FOMC will need to
play a hunch about evolving economic data, as well as potential developments in the realm of fiscal
policy. Furthermore, members also need to decide whether unfolding economic data risks blowing
the Fed off course in achieving its dual mandate without resorting to a faster pace of tightening.
New York Fed President Dudley recently provided some useful insights into how policy conduct
may evolve.

The Federal Open Market Committee (FOMC)
In this chapter, the author was talking about some important topics which is the reason of Fed was
generally so ineffective before the late 1980s, macroeconomic volatility declined so late, inflation
targeting.
Before 1980, the Fed had targeted the price of the bank reserves of the whole financial system. The
ease of that policy had been gauged by some changes in the rate of the federal funds. So in more
specifically, The Federal Open Market Committee (FOMC) provided kind of levels to the federal
funds rate which is called the "fed funds target rate" and that was believed to be consistent in
compassion of the desired values of the variables. Hence after October 1980, the FOMC changed
the approach to be a monetary policy and started to target the quantity of money specifically the
nonborrowed reserves. In response to the financial market innovation and decreasing the inflation,
the Federal Reserve returned back to their approach of targeting the price more than the quantity of
money in the fall of 1982. ... Show more content on Helpwriting.net ...
So the main trade–off that central banks face is a short–term one between inflation, which calls for
tighter policy (higher interest rates, slower money growth), and employment and output, which call
for looser policy (lower interest rates, faster money growth).
The targeting of Inflation makes use of the available information, not only the monetary aggregates,
and that would increase the accountability of central banks. That is going to reduce their
independence but not at the expense of the higher inflation because the inflation targeting, in a
sense, is a substitute for

Essay on Current Macroeconomic Situation in the United States
The United States is the leading economy across the globe and experienced several tribulations in
the recent past following the 2008 global recession. Despite these recent challenges, there are
expectations among policymakers and financial experts that the country will experience solid
economic growth. Actually, financial analysts have stated that the U.S. economy will be
characterized by increased consumer spending, increased investments by businesses, reduced rate of
unemployment, and reduction in government cut. Some analysts have also stated that the country's
economy will strengthen in 2014 with an average of 2.7 percent or more. However, these
predictions can only be understood through an analysis of the current macroeconomic ... Show more
content on Helpwriting.net ...
While there are expectations of a yearly gain of nearly 2.3 million net new jobs, the unemployment
rate is still very high i.e. around 6.5 percent. The lower–than–expected job growth is fueled by
various factors including government hiring, weather, and Obamacare. Actually, similar to
December, January had a lower–than expected increase in job opportunities since only 113,000 jobs
were created. However, the rate of unemployment still reduced to 6.6 percent in this month despite
of the growth in labor force. The current rate of unemployment is the lowest in U.S. since the 2008
recession because more people are leaving the labor force instead of finding jobs. As economic
growth increases moderately in 2014, the rate of inflation is expected to remain below 2 percent.
The price of goods in the country will continue to be restricted by global competition and use of
production capacities that are relatively low as compared to historical averages. In addition, the
inflation rate will remain below 2 percent because of decrease in energy prices and small increase in
the prices of food. Nonetheless, while energy prices continue to reduce this year, the percentage of
the decrease will be less while food prices may regain normal rate of growth. The United States is
currently not concerned about recession because of moderate economic

The Federal Open Market Committee
Introduction
What will happen if the Federal Open Market Committee brings back up the interest rates that have
been down? Since the interest rates have been down, great things for businesses and employment
have been happening. If interest rates go back up, corporate finance is going to be challenged. About
the FOMC
The Federal Open Market Committee (FOMC) is the monetary policymaking body of the Federal
Reserve System. The Federal Open Market Committee is composed of 12 members: five of the 12
Reserve Bank presidents and seven members of the Board of Governors. The Chairman of the
FOMC serves as the Chairman of the Board of Governors. The president of the Federal Reserve
Bank of New York is a permanent member of the Committee. The ... Show more content on
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The Chairman holds a press briefing after the Federal Open Market Committee meeting to present
their current economic projections and to provide additional context for their policy decisions four
times per year. For each Federal Open Market Committee meeting a full set of minutes is published
three weeks after the conclusion of each regular meeting. Five years after the meeting, complete
transcripts of FOMC meetings are published.
By law, the Federal Reserve conducts monetary policy to achieve its macroeconomic objectives of
stable prices and maximum employment. The Federal Open Market Committee usually conducts
policy by adjusting the level of short–term interest rates in response to changes in the outlook of the
economy. Since 2008, the FOMC has also used large–scale purchases of Treasury securities and
securities that were guaranteed or issued by federal agencies as a policy tool in an effort to lower
longer–term interest rates and thereby improve financial conditions and so support the economic
recovery (What).
Review of Literature Why are interest rates being kept at a low level?
In 2007, the financial crisis began. It was the most intense period of global financial strains since the
Great Depression. It had led to a prolonged global economic downturn. The Federal Reserve took
exceptional actions in response to the financial crisis to help stabilize the United

Fiscal Policy and Monetary Policy
Fiscal policy is the governments spending policies, which influences the conditions economy as a
whole. With this policy, regulators can improve unemployment rates; stabilize business cycles,
control inflation, and interest rates to control the economy. The government adjusts the spending
and tax rates to influence the nation's economy. The idea is to find the balance between public
spending and changing tax rates, by increasing or lowering taxes may cause the risk of causing
inflation to rise. If the economy had slowed down, unemployment will go up, so consumer spending
will go down and businesses are not making enough profit. If the government decides to raise the
economy by decreasing tax, it will give the consumers more money to spend while it is increasing
the form of buying services from building roads or schools. The government will create jobs and
wages that will help the economy by paying for such services, it will then impel money into the
economy by decreasing taxation and increase government spending, which is known as "pump
priming." Fewer taxes to pay and more money for the economy will make consumer demands for
good and services to increase. If inflation is too strong then the economy may need to slowdown, In
that kind of situation the government can use this policy to increase taxes to decrease money of the
economy. This policy also can order a reduction in government spending and thereby reduce the
money in circulation. But with the fiscal policy the

The Federal Reserve System And The United States ' Central...
The Federal Reserve System (hereafter referred as the Fed) is the United States' central bank
(Federal Reserve.gov 1). Formed by the United States Congress in 1913 and signed into law by
President Woodrow Wilson, the intention behind its creation was to offer a safer, more stable, and
more flexible financial and monetary system for the United States (Federal Reserve.gov 1). Similar
to other industrialized states, the United States' Fed acts as a central bank designed to meet
particular requirements of the country's financial system and multifaceted economy. However, in
contrast to a majority of other central banks, the United States' Fed is a form of decentralized central
bank. This paper provides a discussion on how the Fed work, the ... Show more content on
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Additionally, the members of the Fed's Board of Governors maintain their appointed positions for
long, spread out period which in turn limits the impact of daily political concerns. In it, however,
worth noting that the Fed functions within the US government in which it designs monetary policies
meant to attain the general objectives set by the US President and Congress. Also in spite of the
Fed's freedom of not requiring approval from the executive branch or the President in some of its
decisions, it is, nevertheless, mandated to report to the System's founder, the US Congress (Federal
Reserve.gov 3). The Congress possesses the authority to modify or eliminate the Fed at any time.
Moreover, the Fed's unique structure offers internal observations and balances to ensure its activities
and decisions are not controlled an individual section of the system. Federal Reserve.gov indicates
that the Feb comprises of four major components including the Board of Governors, Federal
Reserve Banks, Advisory Committees and Federal Open Market Committee (2).
i. Board of Governors (BOG)
Situated in Washington DC, the BOG comprises of seven members assigned for a spread out the 14–
year term with the chairman and vice chair a period of four years (Hennessy and Mace 4). The BOG
makes semi–annual reports to Congress about Fed's goals for money and credit growth and yearly
reports on its functions (Federal Reserve.gov 2). Hennessy and Mace

The Federal Reserve Act And The Central Bank Essay
The Fed
Alison Hedke
FA16.ECON201.142953.ONLINE 2ND 12WK
The Federal Reserve System is often referred to as "the Fed." It serves as the nation's central bank
and arguably plays the most crucial role in the U.S. economy. It is the most important regulatory
agency in the U.S. monetary system and is usually considered the monetary authority. The Fed has
several responsibilities and performs several functions. There are a few theories documented that
challenge whether or not the Federal Reserve System exists the way it is defined.
The Fed was created by Congress to help promote a safe and sound monetary and financial system
for our nation. The Fed was established by the Federal Reserve Act, signed on December 13, 1913,
by President Woodrow Wilson. The Federal Reserve Act states in its opening paragraph "An Act To
provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford
means of rediscounting commercial paper, to establish a more effective supervision of banking in
the United States, and for other purposes." There are seven members, known as the Federal Reserve
Board of Governors, in Washington D.C. They are appointed by the President and approved by the
Senate. The Fed also includes twelve regional Federal Reserve district banks located throughout the
nation based on economic consideration and trade regions that existed in 1913. The twelve Federal
Reserve district banks have twenty–five branches. At the time, the Federal

The Federal Reserve House The Board Of Governors
The Federal System The Federal Reserve house the Board of Governors, The Federal Reserve
Banks, The Federal Open Market Committee (FOMC), and Advisory Committees. The Federal
Reserve Bank is directed by the Board of Governors or Federal Reserve Board, which is located in
Washington D.C. The Board of governors is the national aspect of the Federal Reserve System and
consists of nine board of directors which are appointed by the President serve a fourteen year term.
The Chairman and Vice Chairman are appointed to four year terms which can be renewed (Federal
Reserve, 2009). The Federal Reserve Banks are a network of 12 banks with 25 branches. Each
banks serves a region of the country and the 12 locations are "Boston, New York, Philadelphia,
Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San
Francisco" (Federal Reserve System, 2001). These Federal Reserve Banks serve other banks, the
U.S. Treasury and inadvertently, the public. The FOMC is made up of twelve members, seven from
the Board of governors and five Federal Reserve Bank presidents (Federal Reserve System, 2001).
The Advisory committee advises on the Federal Reserve System and provides information on the
effect of system policies. The advisory committee includes the Federal Advisory Council, the
Consumer Advisory Council, and the Thrift Institutions Advisory Council, which work together to
advise individual Federal Reserve Banks on these interests (Federal Reserve System,

Macroeconomic Unemployment
The State of the US economy on 07 –15 –14
This essay is based on the Federal Reserve Open Market (FOMC) statement released on 07 –15 –14.
The release describes the state of the economy in terms of the following macroeconomic indicators:
a progression towards maximum employment, increased price stability, and rebounding growth of
real gross domestic product. The essay presents a discussion of the Federal Reserve's mandate and
the state of the US economy as of the month of the press release and the proposed policy actions.
The following two indicators – employment and inflation– are of particular interest in this essay.
Consistent with the statutory mandate, the Federal Open Market Committee seeks to promote
maximum employment, stable ... Show more content on Helpwriting.net ...
The personal consumption expenditures function has indicated a relatively stable outlook on long–
term inflation stability. Both survey and market based measures of longer–term inflation expectation
in the economy have stayed steady throughout the first half of the year.
Inflation is primarily determined by monetary policy. The Committee has specified the long–run
goal for inflation to be at two percent. This measure of inflation in the economy is determined by the
PCE index of personal expenditures. The Federal Reserve's statutory mandate of a two percent
long–term goal of PCE inflation is consistent with the ability of the committee to foster price
stability and maximum unemployment in the long run.
Inflation is significant in an economy as it in a large part relates to the price stability within the U.S.
If the inflation rate within the U.S is high, variable, or both, it can greatly interfere with an
economies ability to efficiently operate and, in turn, can reduce or prolong economic growth. The
Committee has specified the long–run goal for inflation to be at two percent. This measure of
inflation in the economy is determined by the PCE index of personal expenditures. The Federal
Reserve's statutory mandate of a two percent long–term goal of PCE inflation is consistent with the
ability of the committee to foster price stability and maximum unemployment in the long run.
One area of current concern

The Federal Reserve System: The US Central Banking System
The Federal Reserve System is commonly referred to as the U.S. central banking system. Congress
discovered this system in 1913 with the purpose of providing America with a stable monetary and
financial system. The Federal Reserve has three components, which includes the Board of
Governors, the Federal Open Market Committee, and the Federal Reserve Banks. The primary
functions of the Federal Reserve consists of conducting monetary policy, banking supervision,
promoting stability for the financial system, and providing banking services. Moreover, the Board of
Governors are an independent governmental agency who have the responsibility of overseeing the
Federal Reserve System. The board members are selected by the President and approved by the
Senate. The board consists of seven ... Show more content on Helpwriting.net ...
The banks are located in St. Louis, Kansas City, Cleveland, Boston, San Francisco, New York,
Chicago, Philadelphia, Dallas, Minneapolis, Atlanta and Richmond. Reserve Banks can also be
referred to as District banks. The board of directors from the Reserve Banks are responsible for
managing the District bank. The directors designate the President and Vice–President of the bank
and is confirmed by the Board of Governors. Likewise, the Federal Reserve System performs many
responsibilities, including executing the Monetary Policy. The Federal Reserve manages inflation
through controlling credit, which is a significant factor affecting money supply. Contractionary
monetary policy is utilized when interest rate rises, which causes credit to become more expensive
and lessens the money supply. However, when there is not a possibility of an inflation, the Federal
Reserve utilizes expansionary monetary policy. This makes credit accessible by lowering interests
rate, leading to employment and business

Federal Funds On The State Of The Economy Essay

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