econ 312 FOMC report 2 - FOMC meeting March 18-19 Since...

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FOMC meeting March 18-19 Since January, it has showed that the growth in economic activity has slowed down because of the winter that we experienced and harsh weather conditions. Even though economic activity has slowed, there are still improvements occurring. Although fiscal policy is restraining economic growth, this restraint is slowly diminishing and hopefully will go away. Also, the current inflation has been running a little under the long term objective of the committee, but their long term expectations have remained stable, which is obviously a good thing. The committee wants to ensure maximum employment and price stability, and in doing this expects that the economic activity will expand at an acceptable pace and gradual improvements will occur in the labor market conditions. Some not so good improvements have also occurred for the committee. The unemployment rate remains higher than it should be, and household spending and business
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Unformatted text preview: fixed investment were showing good signs of advancement, but recovery in the housing sector is still moving slowly towards their goal. Also, the committee realizes that their ideal inflation rate is not being met, and could pose risks to the economic performance if it continues to stay below 2%. In order to fix these problems and to make their way closer towards maximum employment and the improvement of conditions in the labor market, the committee decided to make a reduction in the pace of its asset purchases. Even if these two conditions are met, the committee admits that federal fund rates may be below that level that is considered normal in the long run, but these steps still need to be made in hopes of improving the growth of economic activity. Source: ...
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