FOMC MEETING

Time Tested Investment Service for New Age

Time Tested Investment Service for New Age

Introduction

The success of Investment services is completely dependent on the analysis. Market never waits for anyone so faltering in the analysis is like a crime in this field. But on the other analysis involve some variables which move in a different direction and sometimes even without any strict formula like monetary policy. But, this assignment is not regarding analysis but it is about the monetary policy issue (Peter, 2010).

FOMC, which stands for Federal Open Market Committee which decides the monetary policy direction. It includes whether to increase interest rates or decrease interest rates. First of all FOMC evaluates the economic outlook and then see the inflation. These two factors allow FOMC committee to decide what the optimal level of interest rate is. The next (new) monetary policy is announced just after the meeting of FOMC (Peter, 2010).

Discussion

Level of interest rate has a great significance for the economy. Let's briefly explain the mechanism of monetary policy and how monetary policy did affects the overall economy and why did the investors should care for it.

Well interest rate determines the purchasing power in a society, and that purchasing in return determines inflation in the economy. The higher the interest rate, the more people will be the willing to save/Invest rather than spend and that reduces the purchasing power and hence inflation in the economy. This is also a reason why the investors should care about monetary policy. After all these consideration; Fed announces the monetary policy at FOMC meeting.

Fed view of the US Economy

The Fed predicts a lackluster performance of the US economy. During different meeting of FOMC show concern about the US economy. For Example, the meeting of august 9, 2011 statement of FOMC States that “Economic growth so far ...