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Changes in the Federal Reserve’s monetary policy have been directly affecting the U.S. economy that includes the financial institutions and markets. For this Final Paper, select one large U.S....

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Changes in the Federal Reserve’s monetary policy have been directly affecting the U.S. economy that includes the financial institutions and markets. For this Final Paper, select one large U.S. financial institution/intermediary (e.g., a commercial bank, an investment bank/company, an insurance company, or any other financial institution) to evaluate how changes in the Federal Reserve’s monetary policy—expansionary or contractionary—have been affecting the U.S. financial institutions and markets.

In your Final Paper,

  • Evaluate how the Federal Reserve monitors and influences unemployment and inflation in the U.S. economy.
  • Describe the Federal Reserve’s traditional and nontraditional monetary policy tools.
  • Describe the pros and cons of the Federal Reserve’s implementation of expansionary or contractionary monetary policy tools under different economic situations (e.g., a recession/depression vs. an economic boom).
  • Assess your institution\intermediary’s financial situations during the previous five years.
  • Appraise how your institution/intermediary has been responding to changes in the Federal Reserve’s monetary policy.
  • Explain how the Federal Reserve’s monetary policy affects your institution/intermediary in the financial market. Discuss in detail.
  • Explain how you would expect the Federal Reserve’s monetary policy to change in the next six months, based on the financial market today, addressing the following:
    • Is the Federal Reserve more likely to implement expansionary policy or contractionary policy?
    • How would this change affect your institution/intermediary and the financial markets?
    • How would your institution/intermediary respond to the anticipated Federal Reserve’s monetary policy change?

The Final Paper

  • Must be eight to 10 double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in theAshford Writing Center(Links to an external site.).
  • Must include a separate title page with the following:
    • Title of paper
    • Student’s name
    • Course name and number
    • Instructor’s name
    • Date submitted
  • Must use at least five scholarly, peer-reviewed, and other credible sources in addition to the course text.
    • TheScholarly, Peer Reviewed, and Other Credible Sources(Links to an external site.)table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.
  • Must document all sources in APA style as outlined in the Ashford Writing Center.
  • Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.
Answered Same Day Jun 04, 2021

Solution

Dr. Smita answered on Jun 07 2021
131 Votes
Running Head: The Federal Reserve’s Cu
ent Monetary Policy    
The Federal Reserve’s Cu
ent Monetary Policy                        8
The Federal Reserve’s Cu
ent Monetary Policy
Nyla Smalls
Dr. Samuel Imarhiagbe
ECO 316: Financial Institutions and Markets
Ashford University
May 26, 2020
During July 2019, the Board of Governors decided to follow previous monetary poly regime of federal funds rate from 2‑1/4 to 2-1/2 percent. These rates were maintained, unchanged due to solid economic growth rate that increased at an annual growth rate of 3.1 percent.Thus showing a strong labor marketresulting in a decrease in unemployment at a 3.6 percent rate and the inflation decreased to 1.5 percent; which is below the committee’s objective of 2 percent.
Cu
ently global economy faces health crisis of the COVID-19/Coronavirus out
eak. The committee is trying to achieve their goal of price stability and maximum employment. However, cu
ently the economy is performing in the opposite direction. The COVID-19/Coronavirus out
eak has heavily impacted employment, inflation and economic activity. Several economic activities were slowed, and an immense number of people have lost their jobs. The pandemic has had a global impact on the world’s economy, not just the U.S. Flow of credit but the U.S. Business and households were affected by this issue. In order tackle the pandemic, the Federal committee has decided to maintain the target range for the federal fund rates at 0 to ¼ percent.
The cu
ent framework of the monetary policy of the Federal Reserve was initially adopted in the year 2012 was inclusive of symmetric 2% inflation target, along with the objective to support the maximum possible level of employment. The policy action taken up by Federal Reserve affects the cu
ent as well as the expected future interest rates. The cu
ent monetary framework of the Federal Reserve includes novice elements that were developed and introduced in the present century to influence the expectations of the future fed policy. The present paper attempts to review the cu
ent monetary policy framework in the context of the experience of the expansion that was propagated in the second half of 2009.
Performance of US economy:
According to Federal Reserve Report of 2020,the U.S. economic growth rate Real Gross Domestic Product(RGDP) grows at a moderate rate during second half of 2019.This period’s growth was shown to be slower compared to the first half of 2019 as well as the complete year of 2018 (Board of Governors of the Federal Reserve System, 2020). During this time, business investments were declined due to uncertainty of trade policy and due to weak growth in global economy. Consumption expenditure grows at moderate rate. The report also shows that the unemployment rate was reduced from 3.9% in 2018 to 3.5 % in 2019, which indicates the strength of the labor market at that time. By December 2019, the inflation rates remained below 2 percent. The Federal Open Market Committee (FOMC) has lowered the target range by a cumulative of 75 basis points,
inging it to the cu
ent range of 1-1/2 to 1-3/4 percent.
Federal Reserve Monetary Policy:
Recently, the U.S. economy has reduced the Fed fund rate from 2‑1/4 to 2-1/2 percent to0 to ¼ percent.The U.S. is facing several aspects of trade tension due to trade war,and now the global pandemic caused by COVID, thus lowering the economic growth. Due to lack of investments, business activities, credit and loss of employment in the nation created a lower pressure in demand for goods and services. Share prices in the stock market have seen some of the lowest prices in over a 5-year period due to the pandemic. In order to boost the economy, the government should increase the money supply. Although it was cause inflation, I believe that it can be countered and resolve itself. The Monetary Policy of...
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