Monetary Policy and the Federal Reserve: Current Policy and Conditions

Description:

The Federal Reserve (Fed) defines monetary policy as the actions it undertakes to influence the availability and cost of money and credit. Since the expectations of market participants play an important role in determining prices and growth, monetary policy can also be defined to include the directives, policies, statements, and actions of the Fed that influence how the future is
perceived. In addition, the Fed acts as a “lender of last resort” to the nation's financial system, meaning that it ensures continued smooth functioning of financial intermediation by providing financial markets with adequate liquidity. This role has become of great importance following the onset of the recent financial crisis. Congress has delegated responsibility for monetary policy to the Fed, but retains oversight responsibilities to ensure that the Fed is adhering to its statutory mandate “maximum employment, stable prices, and moderate long-term interest rates.” This report looks at the background and influences of current legislation that would affect the Fed's practices.

Creator(s): Labonte, Marc
Location(s): United States
Creation Date: January 30, 2012
Partner(s):
UNT Libraries Government Documents Department
Collection(s):
Congressional Research Service Reports
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Creator (Author):
Labonte, Marc

Specialist in Macroeconomic Policy

Publisher Info:
Place of Publication: Washington D.C.
Date(s):
  • Creation: January 30, 2012
Coverage:
Place
United States
Description:

The Federal Reserve (Fed) defines monetary policy as the actions it undertakes to influence the availability and cost of money and credit. Since the expectations of market participants play an important role in determining prices and growth, monetary policy can also be defined to include the directives, policies, statements, and actions of the Fed that influence how the future is
perceived. In addition, the Fed acts as a “lender of last resort” to the nation's financial system, meaning that it ensures continued smooth functioning of financial intermediation by providing financial markets with adequate liquidity. This role has become of great importance following the onset of the recent financial crisis. Congress has delegated responsibility for monetary policy to the Fed, but retains oversight responsibilities to ensure that the Fed is adhering to its statutory mandate “maximum employment, stable prices, and moderate long-term interest rates.” This report looks at the background and influences of current legislation that would affect the Fed's practices.

Physical Description:

20 pages.

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Subject(s):
Partner:
UNT Libraries Government Documents Department
Collection:
Congressional Research Service Reports
Identifier:
Resource Type: Report
Format: Text