Fed's Role in Monetary Policy Communication & Challenges to Post-Recession Growth, Slides of Business Administration

Download Fed's Role in Monetary Policy Communication & Challenges to Post-Recession Growth and more Slides Business Administration in PDF only on Docsity! THE FEDERAL RESERVE AND THE FINANCIAL CRISIS KKK KKK KK KKK KKK KKK KKK KKK KKK KK KKK KKK KKK KK Monetary Policy Communication ¢ The Fed also has recently provided more information about its goals and policy approach (for example, by defining price stability as inflation of 2 percent in the medium term). 24 e Docsity.com THE FEDERAL RESERVE AND THE FINANCIAL CRISIS KKK KKK KK KKK KKK KKK KKK KKK KKK KK KKK KKK KKK KK Monetary Policy Communication ¢ The Fed has also begun providing guidance to investors and the public about how it expects to adjust the federal funds rate in the future, given current information about the economic outlook. ¢ This guidance helps the public better understand the FOMC’s views and policy. 25 e Docsity.com Federal Funds Rate Sluggish Economic Recovery 28 • As a result, job  prospects have  improved only  gradually and the  unemployment rate  remains painfully  high. Docsity.com Federal Funds Rate Slowing the Recovery:  Housing 29 • Why has the recovery  been slower than  hoped? • A resurgent housing  market normally helps  power economic  recoveries, but not  this time. Docsity.com Federal Funds Rate Slowing the Recovery:  Housing 30 • Factors weighing on  the housing market  include – a continuing high  foreclosure rate – an overhang of  unsold homes – falling house prices Docsity.com THE FEDERAL RESERVE AND THE FINANCIAL CRISIS KaKK KKK KK aKa KR KKK Ka KKK KKK KKK KKK KK KKK kk Slowing the Recovery: Financial and Credit Markets ¢ The U.S. banking system is significantly stronger than it was three years ago, and credit is more available to households and businesses. 33 e Docsity.com 34 Slowing the Recovery:  Financial and Credit Markets • However, difficulties remain for some borrowers: – For households, mortgages are difficult to obtain  for borrowers with less‐than pristine credit scores. – For small businesses, credit market conditions  remain tight but appear to have begun to  improve.  Docsity.com