Monetary Policy Paper

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Monetary Policy Paper
XXXX
ECO 372
February XX, 20XX

Monetary Policy Paper
Introduction
Money makes the world go round is a phrase often used, but without policy not only the United States monetary system would be a wreck but so would the entire world. The United States has guidelines and policies to ensure that our economy does not fail. This is not fail-safe but it does provide some sort of comfort level. As you read further there will be explanation of the Federal Reserve’s Monetary Policy, characterization of the state of the economy, the higher concern of the Federal Reserve, and the stated direction of recent monetary policy.

State of the Economy
The Federal Reserve has determined that growth in the economic arena has paused in the recent months. This was largely based on weather related incidents and other various transitory factors. Employment is growing at a decent pace reported by the Federal Reserve. While there is still room for vast improvement it appears that the economy may be starting to grow.

Main Concern of the Federal Reserve
Currently the Federal Reserve is concerned with unemployment, inflation, and long-term interest rates. Unemployment is the main concern at hand in order to stay within its statutory mandate. Although employment is still expanding the current unemployment rate is still elevated. The Federal Reserve seeks to maximize employment and price stability. If this continues the Federal Reserve is confident that the unemployment rate will gradually drop to levels that are consistent with mandates. Inflation over the short/medium term is looking to be around 2 percent under the objective rate. After looking at the two main subjects it lends one to think that possibility of a recession is not too overly a concerned in the eyes of the Federal Reserve although nothing is ever in stone.

Stated Direction of Recent Policy
The Federal Reserve is headed toward raising the employment level and...
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