According to the Chairman, what goals does Congress set for the Federal Reserve? What is their...

According to the Chairman, what goals does Congress set for the Federal Reserve?
What is their current stance on interest rates in 2019?
What is happening to the economic indicators that he discussed in the statement (the ones we have already studied: consumption, business investment, net exports, unemployment/labor market, inflation, trade, etc.)? Please discuss each of these indicators.
What, if any, concerns does the Federal Reserve have about the economy in the near future that may cause them to change their monetary policy?

Expert Solution

1)Monetary authority of United States is called as Federal Reserve.Federal reserve is the ultimate authority which balance monetary sector in U S economy.Federal reserve has several goals for balancing monetary sector.They are the following:

Maintaining sustainable employment
Stability in prices and
Moderate interest rate.

Federal reserve works to fulfil these goals.Monetary sector is regulated and supervised by federal reserve for balancing economy.

2)Interest rate on the year 2019 was ranged between 1.50 to 1.75%.But due to economic slowdown caused by coronavirus,federal reserve reduced interest rate 1.50% on March 2020.So current stance on interest rate is .25%.And federal reserve is not ready to increase interest rate untill the situation becomes normal.

3)Coronavirus outbreak made many impacts in US economy.When we analysing different indicators we can see the trend.

Consumption level increased.Consumer spending has a rise in this period.
Business investment is decreased.
Exports and imports is decreased.
Unemployment level decreased.Economists predicted an increase in unemployment rate.But fortunately there is a decrease in number of unemployment.
Inflation is decreased to .1%.This is one of the lowest rate of inflation.
Trade also decreased due to trade war between China and U S.

Federal reserve is not ready to increase interest rate until the economy becomes smoother.One of the major decision of fed in this situation was the reduction in interest rate.

Rahul Sunny answered 8 months ago

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