Fed Watch Analyze: Money And Banking (Research Paper Sample)
This is the fourth Fed Watch Assignment for ECON 3200. Please follow the link below to the FOMC's recent releases. After reading through the, submit a writeup both analyzing the Committee's actions, projections, and reasonings as well as your take on their views. Below are the major components of the FOMC event. Not all of these need to be used, but they should all be useful in developing your analysis.
FOMC Press Release (Links to an external site.) Links to an external site.
FOMC Summary of Economic Projections (Links to an external site.) Links to an external site.
Chairman Powell's Press Conference (Links to an external site.) Links to an external site.
Link to the Federal Reserve Site (Links to an external site.) Links to an external site.
As an analytical exercise, there is no page requirement for this write-up. It is to be however long it needs to be for you to clearly and accurately address the needs of the assignment. This will include analyzing both the thesis and providing a well-rounded response based on your individual analysis. You are expected to use the data provided in the newsletter as well as any extra data you feel pertinent to your argument. The most commonly used macroeconomic data resource is the Federal Reserve Economic Data (FRED) database, though a quick Google search can yield a plethora of useful results as well.
This is the homework from Econ 3200 Money and Banking. You did this work for me last time. And I got 14/20 points. I will give you the picture which shows where should be improved. If you have any question please let me know. And the please do it before 48 hours.
Fed Watch Analysis
According to a public release by the Federal Open Market Committee on March 21, 2018, the U.S. GDP is expected to rise to 2.7% in 2018, 2.4% in 2019, and 2.0% in 2020. On the other hand, the rate of unemployment will reduce to 3.8% in 2018, 3.6% in 2019, and 3.6% in 2020. Also, the report shows that inflation will be 1.9% in 2018, 2.0% in 2019, and 2.1% in 2020 ("The Fed - FOMC Projections Materials, March 21, 2018" n.p.). However, the Fed prefers the core inflation rate in setting the monetary policy. The core inflation rate will be 1.9% in 2018, 2.1% in 2019, and 2.1% in 2020, and lies close to the 2.0% target inflation rate of the Fed. As a result, there is a need for the Fed to hike the rates to a more reliable rate. During the FOMC policy announcement, an increase in economic activities and general economic development was reported. The Fed Chairman Jerome Powell said he is yet to consider changing the mechanisms of fed funds rate control despite the rise in rates and the good economic performance (“Federal Reserve Issues FOMC Statement" n.p.)
Interest rates are the most important economic indicators. The Fed funds rate is raised to slow down economic growth and prevent inflation. The Fed raises interest rates as well as sell its treasuries and other bonds as part of its role in implementing a restrictive monetary policy that reduces the money supply to restrict liquidity and hence stop inflation. Regarding Fed's predictions and resolutions, the agency aims at maintaining inflation close to its 2% target and at the same time maintain a low rate of unemployment ("Implementation Note Issued March 21, 2018” n.p.). Although the Phillips curve indicates that decreasing unemployment act as a push for inflation as the Fed officials believe, it has not been the case throughout the recovery. In this case, the unemployment rate is a lagging indicator because it cannot predict future economic fluctuations (Cox, n.p).
The federal funds rate is the interest rate at which banks lend to each other in relation to Federal Reserves. As a requirement of the central bank, the banks ensure the maintenance of the Federal Reserve requirement for each night (Igan et al., 171). It is a way of ensuring cash availability in each operational day by preventing banks from lending out all the money they get (Kurov and Raluca 128). The fed funds rate is used by the Federal Reserve in regulating United States' economic growth. It is vital in the monetary sectors because it influences other short-term interest rates in banks including bank loans, savings, mortgages, and credit cards (Cox, n.p.).
The FOMC adopts m
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