The Federal Reserve Open Market Committee Essay - 1560 Words

Recently, the Federal Reserve Open Market Committee (FOMC) strongly floated the idea of another interest-rate hike, with the last one being a very minor one after seven years of 0% short-term interest rates. (CITE) While the decision to raise rates may be a foregone conclusion, it is important to note the various effects such a hike will have on the economy as a whole. Everything from the housing market to debt markets to emerging markets will be affected. The ripple effect from such a decision could affect the economy for years to come. With all of these factors in mind, I believe that the Federal Reserve should raise interest rates now. Simply put, the level of interest rates affect economic decisions at every level, whether by the individual consumer, or a major corporation, or entire countries. First, we must look at the residential and commercial real estate market. Homeowners had a golden opportunity to purchase or refinance their homes between 2008 and 2015, when 30-year rates were at unusual lows. (CITE) This was of particular help when many homeowners suffered through â€Å"underwater mortgages† on homes worth less than the mortgages owed. Refinancing at a lower interest rate ensured millions of afflicted homeowners would be able to reduce their interest payments during such a troubling economic period. (CITE) But given the Federal Reserve’s likely decision to raise rates, homeowners will be at a disadvantage. The most recent (as of 12/9/2016) average 30-year fixedShow MoreRelatedThe Federal Open Market Committee1571 Words   |  7 Pageswill happen if the Federal Open Market Committee brings back up the interest rates that have been down? Since the interest rates have been down, great things for businesses and employment have been happening. If interest rates go back up, corporate finance is going to be challenged. About the FOMC The Federal Open Market Committee (FOMC) is the monetary policymaking body of the Federal Reserve System. The Federal Open Market Committee is composed of 12 members: five of the 12 Reserve Bank presidentsRead MoreThe Effect Of Aggregate Demand On The Economy1048 Words   |  5 PagesAs supported by the minutes released from the November meeting of the Federal Open-market Committee, the economy continues to strengthen and looks as though it will remain healthy through the foreseeable future. The economy has returned to normalcy in terms of Consumer Price since the hurricanes hit Florida and Texas, as evidenced by the Consumer Price Index for All Urban Consumers: Gasoline(all types) which is portrayed in the graph below. The FOMC has also reported that inflation is projected toRead MoreThe Federal Reserve Board Is A Regulating Body That Determines How United States Will Lend Money Essay957 Words   |  4 PagesThe Federal Reserve Board is a regulating body that determines how United States will lend money by coordinating the banks and defining the value of the dollar. A Governor on the Federal Reserve board communicates with the twelve region s bank presidents, economic analysts, and their regional directors, and collectively define the dollar by selling long-term and short-term bonds that advance a percentage of the worth. Once an agreement has been made upon fraction percentage, banks are required toRead MoreFederal Funds On The State Of The Economy Essay1227 Words   |  5 Pages10/12/2016 Federal Funds Rate The Federal Funds Rate plays a huge role on the state of the economy in the United States. For something that has such impact on the whole economy in the United States, it is very little known and understood. The Federal Funds Rate may be the most important rate in the country. So what is the Federal Funds Rate? It is an interest rate that is used when banks lend to other banks or other depository institutions from â€Å"funds that are maintained at the Federal Reserve† (TargetRead MoreA Brief Note On The State Of Bureaucracy1094 Words   |  5 Pagesbureaucracy as so many groups within the government are involved with one issue and there is a lack of follow through on responsibility. Management between different government groups has not been the most efficient. Between the House Oversight Committee, investigators, Congress, and the IRS, the scandal has still not been resolved. As a result of too many hierarchy groups, the process of resolving the issue has been long and ted ious. Example 4: Keystone XL pipeline http://www.bloomberg.com/nRead MoreInterest Rate Hike : A Reflection On The Present And Future1583 Words   |  7 Pages 2015, the market witnessed the first time that the Fed hiked the interest rates since 2006. Federal Open Market committee (FOMC) lifted the target range for the Federal funds rate to  ¼ to  ½ percent. Initially, this paper outlines the core marks from December 2015 meeting statement and compares them to the one from January 2016 meeting statement. Later, this paper acclaims Fed’s decision and illustrates appurtenant reasoning, based on multiple data sections ranging from labor market, price levelRead MoreUnited States : Interest Rate Hike1202 Words   |  5 Pagespace of the Federal Reserve s normalisation of monetary policy EVENT The Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) meets on September 16 and 17, in what will be one of the most awaited meetings in recent years. SIGNIFICANCE The chance of a rates lift-off at this meeting has receded recently and currently stands at 32%, as anticipated by the Fed Funds futures ***THIS SHOULD BE CHECKED DAY OF BY APPROVER OR FRANCESCA*****, due to heightened financial markets volatility andRead MoreCompany s Stock Movement And My Personal Opinion Essay807 Words   |  4 PagesStock Market game, i chose four companies as my targets(Apple, Google, Pandora and Fitbit inc), but this time i added two more companies:KBH and SONS. In this financial journal,i will record each company’s stock movement and my personal opinion. On my research(from marketwatch.com), Treasuries prices rose for a fifth straight session on Friday, in line with gains in European sovereign markets, as investors continued to snap up U.S. government bonds with the expectation that the Federal ReserveRead MoreFomc Members Keep March Rate Hike Alive. Market-Based Probabilities1719 Words   |  7 PagesFOMC Members Keep March Rate Hike Alive Market-based probabilities for an increase in the federal funds rate at this month’s Federal Open Market Committee (FOMC) meeting have recently surged. Originally, the emergence of hawkish views from two regional Federal Reserve Bank Presidents, namely John Williams (San Francisco) and William Dudley (New York), along with, more recently, Fed Chair Yellen have produced a significant resetting of expectations. The FOMC has become an extremely democratic institutionRead MoreProspects For The Us Economy1294 Words   |  6 Pagesthe recent softness in high-frequency data, the economy is close to full employment and growth is likely to average 2.4% in 2015. It should accelerate slightly in 2016, as the buoyant labour market will boost private consumption, offsetting some of the weakness in the industrial and trade sectors. Federal Reserve (Fed) officials have highlighted the external headwinds posed to the US economy by slowing growth in emerging countries and a continued debt ove rhang from the financial crisis. What next