The Federal Reserve System is the central banking system of the United States. It was created on December 23,1913,with the enactment of the Federal Reserve Act,after a series of financial panics led to the desire for central control of the monetary system in order to alleviate financial crises. Over the years,events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System.
The monetary policy of The United States is the set of policies which the Federal Reserve follows to achieve its twin objectives of high employment and stable inflation.
Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability. Further purposes of a monetary policy may be to contribute to economic stability or to maintain predictable exchange rates with other currencies. Today most central banks in developed countries conduct their monetary policy within an inflation targeting framework,whereas the monetary policies of most developing countries' central banks target some kind of a fixed exchange rate system. A third monetary policy strategy,targeting the money supply,was widely followed during the 1980s,but has diminished in popularity since that,though it is still the official strategy in a number of emerging economies.
The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System that is charged under United States law with overseeing the nation's open market operations. This Federal Reserve committee makes key decisions about interest rates and the growth of the United States money supply. Under the terms of the original Federal Reserve Act,each of the Federal Reserve banks was authorized to buy and sell in the open market bonds and short term obligations of the United States Government,bank acceptances,cable transfers,and bills of exchange. Hence,the reserve banks were at times bidding against each other in the open market. In 1922,an informal committee was established to execute purchases and sales. The Banking Act of 1933 formed an official FOMC.
The Federal Reserve System has faced various criticisms since it was authorized in 1913. Nobel laureate economist Milton Friedman and his fellow monetarist Anna Schwartz criticized the Fed's response to the Wall Street Crash of 1929 arguing that it greatly exacerbated the Great Depression. More recent prominent critics include former Congressman Ron Paul.
John Brian Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University,and the George P. Shultz Senior Fellow in Economics at Stanford University's Hoover Institution.
In macroeconomics,inflation targeting is a monetary policy where a central bank follows an explicit target for the inflation rate for the medium-term and announces this inflation target to the public. The assumption is that the best that monetary policy can do to support long-term growth of the economy is to maintain price stability,and price stability is achieved by controlling inflation. The central bank uses interest rates as its main short-term monetary instrument.
Frederic Stanley "Rick" Mishkin is an American economist and Alfred Lerner professor of Banking and Financial Institutions at the Graduate School of Business,Columbia University. He was a member of the Federal Reserve Board of Governors from 2006 to 2008.
Kevin Maxwell Warsh is an American financier and bank executive who served as a member of the Federal Reserve Board of Governors from 2006 to 2011.
Jeffrey M. Lacker is an American economist and was president of the Federal Reserve Bank of Richmond until April 4,2017. He is now a Distinguished Professor in the Department of Economics at the Virginia Commonwealth University School of Business in Richmond,Virginia.
The Shadow Open Market Committee (SOMC) is an independent group of economists,first organized in 1973 by Professors Karl Brunner,from the University of Rochester,and Allan Meltzer,from Carnegie Mellon University,to provide a monetarist alternative to the views on monetary policy and its inflation effects then prevailing at the Federal Reserve and within the economics profession.
This is a list of historical rate actions by the United States Federal Open Market Committee (FOMC). The FOMC controls the supply of credit to banks and the sale of treasury securities. The Federal Open Market Committee meets every two months during the fiscal year. At scheduled meetings,the FOMC meets and makes any changes it sees as necessary,notably to the federal funds rate and the discount rate. The committee may also take actions with a less firm target,such as an increasing liquidity by the sale of a set amount of Treasury bonds,or affecting the price of currencies both foreign and domestic by selling dollar reserves. Jerome Powell is the current chairperson of the Federal Reserve and the FOMC.
James Brian Bullard is the former chief executive officer and 12th president of the Federal Reserve Bank of St. Louis,a position he held from 2008 until August 14,2023. In July 2023,he was named dean of the Mitchell E. Daniels Jr. School of Business at Purdue University.
William C. Dudley is an American economist who served as the president of Federal Reserve Bank of New York from 2009 to 2018 and as vice-chairman of the Federal Open Market Committee. He was appointed to the position on January 27,2009,following the confirmation of his predecessor,Timothy F. Geithner,as United States Secretary of the Treasury.
Carlos A. Végh is a Uruguayan academic economist who,since 2013,is the Fred H. Sanderson Professor of International Economics at the Johns Hopkins School of Advanced International Studies (SAIS),and holds a joint appointment with Johns Hopkins' Department of Economics. He is also a research associate at the National Bureau of Economic Research since 1998. He was the World Bank's chief economist for Latin America and the Caribbean from February 1,2017 to June 30,2019,while on leave from Johns Hopkins. He was previously a professor of economics and vice-chair of undergraduate studies at UCLA (1996-2005) and professor of economics at the University of Maryland (2005-2013). His research work on monetary and fiscal policy in emerging and developing countries has been highly influential in both academic and policy circles. In particular,his work on fiscal procyclicality in emerging markets has been instrumental in generating a copious literature on the subject,which has influenced the adoption of fiscal rules in many emerging markets.
Richard Harris Clarida is an American economist who served as the 21st Vice Chair of the Federal Reserve from 2018 to 2022. Clarida resigned his post on January 14,2022,to return from public service leave to teach at Columbia University for the spring term of 2022. He is the C. Lowell Harriss Professor of Economics and International Affairs at Columbia University and,from 2006 until September 2018,Global Strategic Advisor for PIMCO. He is notable for his contributions to dynamic stochastic general equilibrium theory and international monetary economics. He is a former Assistant Secretary of the Treasury for Economic Policy and is a recipient of the Treasury Medal. He also was a proponent of the theory that inflation was transitory during the COVID-19 pandemic.
Forward guidance is a tool used by a central bank to exercise its power in monetary policy in order to influence,with their own forecasts,market expectations of future levels of interest rates.
Nicoletta Batini is an Italian economist,notable as a scholar of innovative monetary and fiscal policy practices. During the crisis she pioneered the IMF work exposing the dangers of excessive fiscal austerity and designed ways to consolidate public debt successfully during phases of financial deleveraging. Since 2003 at the International Monetary Fund,she has served as Advisor of the Bank of England’s Monetary Policy Committee between 2000-2003 and was Professor of Economics at the University of Surrey (2007-2012),and Director of the International Economics and Policy office of the Department of the Treasury of Italy’s Ministero dell’Economia e delle Finanze (MEF) between 2013-2015. Batini's fields of expertise include monetary policy,public finance,open economy macroeconomics,labor economics,energy and environmental economics,and economic modeling. She has handled extensive consultancy roles in the public sector in advanced and emerging market countries. She holds a Ph.D. in international finance from the Scuola Superiore S. Anna and a Ph.D. in monetary economics from the University of Oxford.
David I. Meiselman was an American economist. Among his contributions to the field of economics are his work on the term structure of interest rates,the foundation today of the implementation of monetary policy by major central banks,and his work with Milton Friedman on the impact of monetary policy on the performance of the economy and inflation.
Marvin Seth Goodfriend was an American economist. He held the Allan H. Meltzer Professorship in economics at Carnegie Mellon University;he was previously the director of research at the Federal Reserve Bank of Richmond. Following his 2017 nomination to the Federal Reserve Board of Governors,the White House decided to forgo renominating Goodfriend at the beginning of the new term.
