Economics: What should the FOMC do? (Principles of Macroeconomics)
(http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm). ;There is general consensus among economists that there has been some expansion in the business cycle throughout 2014 and 2015. Some sectors of the economy are doing well but other sectors are not. The stock market and housing in some regions are recovering from the Great Recession nicely, but the unemployment rate, although falling slowly, is still relatively high and real wages are not increasing as rapidly as desired. The data is giving conflicting signals, as usual. If we are headed into a sustained economic expansion, low interest rates could be inflationary – and once that gets started, it’s hard to put that genie back in the bottle. Does the Fed want to continue with their stimulatory (“accomodative” in Fed-speak) monetary policy?
Suppose you were a voting member of the Federal Open Market Committee. Would you vote to implement monetary policies that would speed the economy up (to fight unemployment), or slow it down (to fend off potential inflation) — and why?
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In your submission, you’ll need to address the following question. What should the Fed decide to do at this meeting? ;I’m giving you a lot of latitude in this last Discussion Topic to tell me about the current state of the economy, the proper role of monetary policy (i.e. raise or lower rates), and how effective that would be compared to fiscal policy. ;