FOMC Minutes
1. Please read the minutes of the Jan 27-28 meeting. What did the committee members
comment on current economy: a. price stability (i.e., inflation level); b. employment rate;
c. economic growth rate, personal consumption expenditures, housing market, etc.? What
is the members’ review on the financial situation: a. key interest rates such as IOER,
federal funds rate, long-term interest rate, Treasury bond yield, and what actions are taken
by other central banks.
2. What actions does the Fed plan to take till their next meeting? For example, will the Fed
tighten or loosen monetary policy? What open market operations will the Fed use? Will the
Fed change the target federal funds rate? Please be specific.
3. What is the committee members’ current assessment of any risk that our economy or the
financial system is facing? Read the economy outlook section and report the potential risk,
if any, that our economy may face in the near future.
4. Please incorporate your own assessment and the FOMC’s assessment on current
economy and financial situation and what we have learned in our in-class discussion when
you answer the following questions: what kind of committee policy action should the
FOMC take in their next meeting (Mar 17-18). If the FOMC were to continue the current
action, would you vote YES or NO? When and why should the Fed start “policy firming?”
Please explain your vote and reason in details.
Answer
1. Please read the minutes of the Jan 27-28 meeting. What did the committee members
comment on current economy: a. price stability (i.e., inflation level); b. employment rate;
c. economic growth rate, personal consumption expenditures, housing market, etc.? What
is the members’ review on the financial situation: a. key interest rates such as IOER,
federal funds rate, long-term interest rate, Treasury bond yield, and what actions are taken
by other central banks.
The committee members agreed that both employment and price stability need to continue
their growth to the target ranges of maximum level and 2 percent inflation, respectively.
They plan to do this with the use of economic, financial, and monetary tools for a long
term plan. Publicly communicating this information helps to lock in the long-term goal of
inflation. With its dual mandate, they believe the economy to expand moderately
consistent with their expected levels of growth in the labor market. The personal
consumption expenditures rose in the last two quarters of 2014 credited from sales in light
