Economics the Federal Reserve the Research Paper

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It is thought that the pace of the recovery will be slowed by people's desire to rebuild wealth, still-tight credit conditions facing some borrowers, and, despite some tentative signs of stabilization, continued weakness in labor markets. With considerable resource slack continuing to suppress cost pressures and with longer-term inflation expectations stable, it is thought that inflation subdued for some time (Monetary Policy Report to the Congress, 2010).

The Federal Reserve has continued to support the functioning of financial markets and promote recovery in economic activity doing a wide array of things. The Federal Open Market Committee (FOMC) has maintained a target range of 0 to 1/4% for the federal funds rate throughout the second half of 2009 and early 2010. They have also continued to purchase Treasury securities, agency mortgage-backed securities (MBS), and agency debt in order to provide support to mortgage and housing markets and to improve overall conditions in private credit markets.

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In order to encourage a smooth transition within the financial markets, the Federal Reserve steadily slowed the pace of acquisitions in late 2009 and early 2010. The planned acquisitions of $300 billion of Treasury securities were done by October of last year, while the purchases of $1.25 trillion of MBS and about $175 billion of agency debt were expected to be finished by the end of the first quarter of this year (Monetary Policy Report to the Congress, 2010).

The Fed has a very tough job in that everything that it does in regards to monetary policies has some kind of effect on this country's economic production and employment. This is why the decisions that they make are done so with great exploration and care. The Fed has a lot of power to control the economic health of this country and does so with tremendous.....

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