What is the instance of monetary policy

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Current monetary policy

Problem 10 in Chapter 4 asked you to consider the current stance of monetary policy. Here, you are asked to do so again, but with the additional understanding of monetary policy you have gained in this and previous chapters. Go to the Web site of the Federal Reserve Board of Governors (www.federalreserve.gov) and download either the press release you considered in Chapter 4 (if you did Problem 10) or the most recent press release of the Federal Open Market Committee (FOMC).

a. What is the stance of monetary policy, as described in the press release?

b. Is there evidence that the FOMC considers both inflation and unemployment when setting interest rate policy, as would be implied by the Taylor rule?

c. Does the language make specific reference to a target for inflation?

d. Does the language raise any issues related to macro prudential regulation of financial institutions?

Problem 10

Current monetary policy Go to the Web site for the Federal Reserve Board of Governors (www.federalreserve.gov) and download the most recent monetary policy press release of the Federal Open Market Committee (FOMC). Make sure you get the most recent FOMC press release and not simply the most recent Fed press release.

a. What is the current stance of monetary policy? (Note that policy will be described in terms of increasing or decreasing the federal funds rate as opposed to increasing or decreasing the money supply.)

b. If the federal funds rate has changed recently, what does the change imply about the bond holdings of the Federal Reserve? Has the Fed been increasing or decreasing its bond holdings? Finally you can visit the Fed's website and find various statements explaining the Fed's current policy on interest rates. These statements set the stage for the analysis in Chapter 5. Some parts of these statement should make more complete sense at the end Chapter 5.

Reference no: EM131160814

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