Question

Go to the Federal Reserve’s website to find the statement issued after the March 2018 FOMC meeting, https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

a) Briefly explain what the FOMC is.

b) What is the current target federal funds rate?

c) Is the target federal funds rate different from the target federal funds rate in the previous FOMC statement? If yes, by how much does it differ?

d) Does the statement comment on current macroeconomic conditions in the United States? How does it describe the U.S. economy?

Answer 1

Fomc is committee dealing with open market operations of fed reserve. It buys or sells securities to decrease or increase federal funds rate.

B current target rate is between 1.5 to 1.75 rate

C yes it is different. It is greater by 0.25%

D yes it does comment. It mentions that economy is moving at healthy rate. The unemployment rate is at historic low levels 4.1% and inflation is quite low. But given healthy growth the central bank expects inflation to pick up