Summary of Chair Powell’s Statement on FOMC Meeting

Name
Instructor
Course
Date
FOMC Meeting Essay
Summary of Chair Powell’s Statement
Powell gives an economic overview of the US and the decisions regarding the Federal Open Market Committee (FOMC) meeting that was held on that day. The committee ruled that the 2019 economic conditions are expected to decline but remain at a favorable level. The basis of the decision is on the comparison of the 2018 economic situation which was more favorable than that of which forecasted to be in 2019. Specifically, the household and business consumptions levels have been seen to reduce compared to that of 2018 (The Fed - March 19-20, 2019 FOMC Meeting. 1)" Similarly, inflation rates have improved, investment has decreased, and employment has also reduced. Nevertheless, all the economic variables are expected to remain at a favorable level which makes them give a generally positive outlook of the expected economic situation in 2019. Further, the Chair explained that the employment rate is still expected to be below 4%, the inflation around the expected range, and economic growth is expected to continue improving at around 2%. Notwithstanding, the general economic growth in 2018 was seen to be 3.1% but this is expected to reduce to 2.5% in 2019 basing the decision on inadequate data which was collected which means it will still remain favorable despite the anticipated global risks which are expected to hinder it such as the unsolved issue of Brexit.
Application of Course Readings
The decision can be understood better by applying class readings such as the dual mandate, the federal funds market, and the aggregate demand (AD) and aggregate supply (AS) concepts. First, the objective of the dual mandate is to achieve stability in prices and maximum employment levels. Moreover, stable prices will only be achieved if the inflation rate remains favorable. Further, maximum employment will be seen if the sizes of people who are unemployed are sufficiently low and this will only occur if the general economy is properly functioning. Additionally, AD and...