The FOMC Open Market Operations are directed by the Federal Open Market Committe

Question

The FOMC
Open Market Operations are directed by the Federal Open Market Committee and carried out by the New York Federal Reserve Bank. The FOMC meets eight times per year, or about every six to seven weeks. Central bankers would usually prefer to work in secrecy. But the general operating rules of a democracy require openness. The compromise reached with respect to the FOMC allows them to meet in private, but at each meeting the FOMC must release the minutes of its previous meeting. The minutes and statements of FOMC meetings are often intentionally vague, written in a language that some call "Fedspeak.” In addition to the regular macroeconomic statistics such as the latest GDP figures, unemployment rate, price indexes, index of leading indicators, etc., the FOMC is guided by "the Beige Book" (http://www.federalreserve.gov/monetarypolicy/beigebook/) The Beige Book examines economic conditions on a region-by-region basis (each Federal Reserve district is a region for these purposes). It also draws on interviews with business leaders and other anecdotal information that sometimes gives FOMC members a feel for the economy that statistics alone do not provide.
Read the summary of the most recent Beige Book. 1) How would you characterize the state of the economy?
2) What do you predict for the near future?
The FOMC
Open Market Operations are directed by the Federal Open Market Committee and carried out by the New York Federal Reserve Bank. The FOMC meets eight times per year, or about every six to seven weeks. Central bankers would usually prefer to work in secrecy. But the general operating rules of a democracy require openness. The compromise reached with respect to the FOMC allows them to meet in private, but at each meeting the FOMC must release the minutes of its previous meeting. The minutes and statements of FOMC meetings are often intentionally vague, written in a language that some call "Fedspeak.” In addition to the regular macroeconomic statistics such as the latest GDP figures, unemployment rate, price indexes, index of leading indicators, etc., the FOMC is guided by "the Beige Book" (http://www.federalreserve.gov/monetarypolicy/beigebook/) The Beige Book examines economic conditions on a region-by-region basis (each Federal Reserve district is a region for these purposes). It also draws on interviews with business leaders and other anecdotal information that sometimes gives FOMC members a feel for the economy that statistics alone do not provide.
Read the summary of the most recent Beige Book. 1) How would you characterize the state of the economy?
2) What do you predict for the near future?
The FOMC
Open Market Operations are directed by the Federal Open Market Committee and carried out by the New York Federal Reserve Bank. The FOMC meets eight times per year, or about every six to seven weeks. Central bankers would usually prefer to work in secrecy. But the general operating rules of a democracy require openness. The compromise reached with respect to the FOMC allows them to meet in private, but at each meeting the FOMC must release the minutes of its previous meeting. The minutes and statements of FOMC meetings are often intentionally vague, written in a language that some call "Fedspeak.” In addition to the regular macroeconomic statistics such as the latest GDP figures, unemployment rate, price indexes, index of leading indicators, etc., the FOMC is guided by "the Beige Book" (http://www.federalreserve.gov/monetarypolicy/beigebook/) The Beige Book examines economic conditions on a region-by-region basis (each Federal Reserve district is a region for these purposes). It also draws on interviews with business leaders and other anecdotal information that sometimes gives FOMC members a feel for the economy that statistics alone do not provide.
Read the summary of the most recent Beige Book. 1) How would you characterize the state of the economy?
2) What do you predict for the near future?

Explanation / Answer

The FMOC released its latest Beige Book in June 2016, reflecting the current economic condutions. Overall the conditions in the labor market have shown tremendous improvements. The unemployment rate is now equal to the median of the participants of FOMC estimates of its longer-run normal level. However, the goal of full employment is yet to be achieved. Inflation remains below the longer-run goal of 2 percent. The goal of price stability has somehow been achieved.

To achieve its goal of maximum employment and price stability, the FOMC had raised the target range for that rate to 0.25 to 0.5 percent. The decision to increase the federal funds rate was reasoned for the considerable improvement in the labor market last year.   

Summerized findings

2) In short, the economy is still recovering from recession and is likely to receive more consumption spending and investment spending. The unemployment will fall only slightly. Inflation will remain under control or targetted level. Overall the outlook is optimistic

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