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Monetary Policy Tools (Federal Reserve Bank of NY)
Instruments of monetary policy: ,[object Object],[object Object],[object Object],[object Object],[object Object]
1.  Open market operations ,[object Object],[object Object],[object Object],[object Object]
Federal reserve wants to decrease monetary base Selling government securities FED debits  commercial banks Banks  debit its clients’  accounts   Federal funds  rate   goes up Interest rates  rises   Slowing the economy and curbing inflation
The aim – to increase monetary base ,[object Object],Buying government securities FED credits  commercial banks Banks  credit its clients’  accounts   Federal funds  rate   goes down Interest rates  also goes down
2.  Reserve requirements   (RR) ,[object Object],[object Object],[object Object]
3.  Discount window lending   ,[object Object],Interest rate  Discount rate
2 types of monetary policy ,[object Object],The FED  raises discount  rate Economic activity slowed
2 types of monetary policy ,[object Object],Economic activity stimulated   Discount rate lowers
Thank you for your attention!

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Monetary policy tools

  • 1. Monetary Policy Tools (Federal Reserve Bank of NY)
  • 2.
  • 3.
  • 4. Federal reserve wants to decrease monetary base Selling government securities FED debits commercial banks Banks debit its clients’ accounts Federal funds rate goes up Interest rates rises Slowing the economy and curbing inflation
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10. Thank you for your attention!