http://www.federalreserve.gov/monetarypolicy/beigebook/default.htm http://www.fe
ID: 1114622 • Letter: H
Question
http://www.federalreserve.gov/monetarypolicy/beigebook/default.htmhttp://www.federalreserve.gov/monetarypolicy/mpr_default.htm
The Federal Reserve Bank publishes a report called the Beige Book eight times a year that summarizes the current economic conditions in each of the 12 bank districts. This report is used by the Federal Open Market Committee when deciding on monetary policy. Go to www.federalreserve.gov/monetarypolicy/beigebook/default.htm to read the most recent Beige Book (October 18, 2017). Go to www.federalreserve.gov/monetarypolicy/mpr default.htm to read about the most recent Fed actions (July 7, 2017) Then answer the following questions: a. b. C. What are the current economic conditions? What is the most recent policy action taken by the Fed? Based on your answers to a. and b., what policy action do you recommend the Fed take at its next meeting? Explain your reasons.
Explanation / Answer
A.
At present, the federal funds rate is kept at the 1% to 1.25%. The unemployment rate is 4.1%. Further, claims of unemployment benefits are also showing the downward pressure. It is due to the economy coming of the recession and posing a strong recovery. At present, the GDP of the USA economy is showing an encouraging growth of 3% approx. It is the result of proactive monetary policy and fiscal policy taken up in the USA. It has created an increased level of consumers as well as investor confidence in the USA economy.
B.
Most recent policy action is to keep the Federal Funds rate to be 1% to 1.25% in the economy. It is done in the light of the lower unemployment rate and weakening inflation.
C.
Federal Reserve will either maintain the Federal fund rate or it will be increased by 25 basis points. Besides, there will be a further withdrawal of open market operation and economy will be slowly left to grow without the stimulus package.
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