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What is the Fed trying to say in the press release in the link below?...

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user100400 | Honors

Posted April 5, 2013 at 4:57 AM via web

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What is the Fed trying to say in the press release in the link below?

http://www.federalreserve.gov/newsevents/press/monetary/20130320a.htm

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted April 5, 2013 at 5:10 AM (Answer #1)

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This press release is a brief summary of the thinking of the Federal Open Market Committee which met from March 19 to March 20, 2013.  The committee was considering what the Federal Reserve should do going forward in terms of monetary policy.  The basic message of this press release is that the Fed will continue to do what it has been doing because there is no danger of high inflation and the economy is still growing sluggishly.

In the first paragraph, the Fed is setting out its view of the state of the economy at the time of the meeting.  It argues that the economy is not improving rapidly.  There are some good things happening, such as increased spending and a strengthening housing market.  On the other hand, unemployment remains high and Congress is tightening up on government spending.

In the second paragraph, the Fed says that it thinks that the economy is going to continue in a way that will have some growth and low inflation.  It says that it thinks that there are still more risks of recession than of inflation.

This leads to the Fed’s explanation of what it will do in the near future.  The Fed is saying that it will continue with the monetary policy that it has been pursuing.  It says that it will continue to buy government securities, thus increasing the money supply.  It says that it will continue to keep interest rates extremely low.  The Fed then ends by saying that it will keep monitoring conditions but that it will continue with its current policies until unemployment drops or inflation threatens to rise.

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