Question

Explain in detail the past FOMC monetary policy decisions during the period 2000 to 2019?

Answer 1

The Federal Open Market Committee (FOMC) has been committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.In 2009 the US economy was going through the worse contraction of its economy. It had to go under proper monetary and fiscal reform to bring back the country on the track of growth. Employment had fallen steeply and unemployment rate surged at 7.6%. The deteriorating job market, considerable losses of equity and housing wealth, and tight lending conditions had weighed down consumer sentiment and spending. Monetary policies by FOMC was only done by spurring or restraining growth of overall demand for goods and services in the economy. When overall demand reduced in relation to the economy's capacity to produce goods and services, unemployment was on the rise and inflation declined. The FOMC stabilized the economy in the face of these developments by stimulating overall demand through an easing of monetary policy that lowers interest rates. Conversely, when overall demand for goods and services is too strong, unemployment can fall to unsustainably low levels and inflation can rise. In such a situation, the Fed had guided the economic activity back to more sustainable levels and kept inflation in check by tightening monetary policy to raise interest rates. Over the second half of 2018, as the labor market kept strengthening and economic activity continued to expand strongly, the FOMC gradually moved interest rates toward levels that are more normal for a healthy economy.