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At 2 pm EST Today
By Staff Reporters
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ABOUT THE FEDERAL OPEN MARKET COMMITTEE
The term “monetary policy” refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.
The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.
Cite: https://www.federalreserve.gov/monetarypolicy/fomc.htm
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And so, the macroeconomic FOMC is kicking off at 2pm ET today, when the Fed will announce the first interest rate cut in over four years. But, financial watchers are split between two predictions: a standard 0.25% cut or a more aggressive one of 0.5% (investors are betting on the latter, while many analysts think the former).
Regardless of its size, today’s rate cut and subsequent ones are expected to make borrowing cheaper for consumers and businesses, with ripple effects throughout the economy.
CITE: https://www.r2library.com/Resource
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Thank You
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Filed under: "Ask-an-Advisor", Accounting, Funding Basics, Glossary Terms, Investing | Tagged: fed, Federal Open Market Committee, Federal Reserve, FOMC, interest rates, IR, IRS |
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