Monetary Policy Paper

Monetary Policy Paper

In this paper the issues concerning the current United States economy will be discussed. This will bring in to question, what the current Federal Reserve issues and standings currently standings are, as well as some of the inflation and recession matters. Recent press releases from the Federal Reserve include information indicating the economy expansion and the recent labor market. The current unemployment rate has shown improvement, however, it also is still at an elevated rate. Although, much of the real estate market has been mandated and has also shown improvement, the housing rate still is depressed. In regard to crude oil, prices have recently rapidly increased, but the long term inflation expects to move to a more stable and manageable market by this coming summer.

Current Economy

The Federal Reserve releases the country's financial standings and major economy concerns regularly and usually via a press release. This is the routine route and free of the open press bias to relay information. The Feds portray a safe nation that can maintain a flexible and stable financial system, however, who will actually believe that given the recession since 2006. When the economy appears to be struggling noticeably, most investors will research what actions the Federal Reserve is taking to manage finances. The Federal Reserve has set stimulatory policies to manage growth (at a very slow rate), increase the employment rate, as well as managing credit.

Federal Reserve Issues

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Federal Open Market Committee (FOMC) expects to maintain a highly accommodative stance for monetary policy (US Federal Reserve, 2012). The Federal Reserve committee is expecting the economy to strengthen consistently moderately over the next few quarters, and then continue to grow gradually. There is no immediate anticipation or plan to fix the unemployment rate in the near future.

Direction of the Monetary Policy

In support of an economy struggling to recover and ensure that the inflation rate will consistently remain moderate, the Federal Reserve committee has set goals for federal funds to keep the rate as low as 0 to ¼ percent. The committee is also keeping existing policies in a working manner to invest payments from parent holdings of debt and mortgage funds to rolling them over to a maturity auction. These policy decisions will require review regularly to manage the security holdings appropriately to display a strong economic recovery with stability reflecting.

Conclusion

Although the Fed's statutory mandate might be expected to be a significant curb on its independence, "the