Question

Explain at least two factors that limit the Federal Reserve’s ability to have complete control over market interest rates.

Answer 1

1) EXPLAIN ANY TWO FACTORS THAT LIMIT FEDERAL RESERVES ABILITY TO HAVE COMPLETE CONTROL OVER MARKET INTEREST RATES?

A)Monetary policy and money supply are the two factors that have complete control over the market interest rates.lets have a deep insight as how they impact it

MONETARY POLICY: It is the policy adopted by the monetary authority of a country that controls either the interest rate payable on very short term borrowing or the money supply often targeting interest rates or to ensure price stability and general price reserves it contributes stability and provides support to the global economic thesis and control the inflation and price stability that ensures more growth that ensures rate of interest have been due to the GDP as it is one of the barriers to ensure full security and support with more and more terms of advanced prices and moreover federal reserves have rate of control over the economic inflation which ensure stability and ensures more rate of interest

MONEY SUPPLY: It also ensures same policy but illustrates lot of endurance towards the GNP which has stability over the increased rate of interest which encompasses the control and the rates of it has been more and more towards the prices and the amount of money available in the money at the point of time and the currency in circulation and the demand deposits.so according to the sources of the money that was underdone by the different countries which has more power through the amount of money that was speculated through out the world.so it was always one of the biggest affect that was done and the federal reserves have the ability to control over the interest rates!!!