Question

Please answer for December 2018.......Visit the Fed's Summary of Commentary on Current Economic Conditions (Links to an external site.)Links to an external site., also known as the Beige Book. Prepare a proposal recommending monetary policy actions designed to correct problems with spending, employment, and prices. Defend your choices.

Answer 1

Monetary policy actions for 2018 based on Beige Book.

Spending: Spending has seen a moderate growth overall but increase in input cost is putting pressure on consumer and business spending and monetary policy action for December is to follow no change in interest rates/Feds funds rate in order to keep the momentum or increase the pace of economic growth.

Employment: Employment growth is increasing moderately overall but wage pressure is increasing due to lack of technically qualified/skilled workers and for December there is need to not to follow any increase in interest rates/Feds funds rates.

Prices: Prices are increasing moderately due to increase in input costs due to import tariffs, trade war and uncertainty but overall price increase is moderate so for December there should be no change in monetary policy instance means no increase in interest rates/Feds funds rate and open market operations, i.e. increase in buying of treasury bonds in order to increase money supply in the market for increasing the growth.