Trusting The Fed s Judgement - 1789 Words

Trusting the Fed’s Judgement in 2017 At last month’s Federal Open Market Committee (FOMC) meeting, Chair Yellen expressed her most upbeat assessment about the near-term path for the US economy by claiming that fiscal stimulus was unnecessary to achieve full employment. Accordingly, unemployment is expected by the FOMC to settle below its natural rate this year. Meanwhile, the current underlying sentiment amongst members appears to suggest that the economy can withstand three 25 basis points increases in the federal funds rate in 2017. This view will, however, not necessarily remain static. In December 2015, for example, the mood of the FOMC appeared to support four 25 basis points increases in its policy rate during 2016. The outcome was,†¦show more content†¦Will the Dollar and Financial Conditions Impact US Monetary Policy in 2017? Deteriorating global financial conditions in the immediate aftermath of the Fed’s December 2015 rate hike helped to produce a sizeable sell off in equity markets in January last year, although a sharp decline in China’s foreign exchange reserves was also to blame. The FOMC was widely expected to raise its policy rate again in March 2016, but the volatile events in financial markets consequently forced members, notably Chair Yellen, to embrace a more dovish policy posture which remained intact until last month. In contrast to last year, financial conditions have not tightened significantly since last month’s decision to raise the federal funds rate. This will, therefore, give a green light for the Fed to proceed with interest rate normalisation depending on economic conditions. Thus, financial markets currently have greater faith in the Fed’s economic outlook compared to a year ago. Meanwhile, the dollar exchange rate presents the FOMC with a more intriguin g challenge, namely the risk of significant overshooting to the upside via a combination of an easier fiscal stance and tightening monetary policy. This outcome occurred between 1980 and 1985, and it helped to produce a significant hollowing out of the US manufacturing sector, notably in the Rust Belt, as well as producing large trade deficits. TheShow MoreRelatedKill A Mockingbird By Harper Lee1982 Words   |  8 Pagesolder brother Jem were considered to be at the top of Maycomb’s social caste due to their light complexion, respectable family history, and Atticus’ career as a lawyer, other families were not so lucky. As Jem stated, There s the ordinary kind like us and the neighbors, there s the kind like the Cunninghams out in the woods, the kind like the Ewells down at the dump, and the Negroes. (Harper 259). 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Since the Answer Book is 178 pages long, colleagues may find the use of ‘short keys’ useful when searching for answers. By pressing the and keys together, you will be prompted by a pop-up menu. Type in the question number or key word(s) you are seeking answers for (e.g. ‘2.8.3’ or ‘Bausch Lomb’) and press and the answers should appear right in front of you! I hope that you and your students will find the answers (and they are only suggested answers at best) useful in the teaching