US monitory policy is controlled by the Federal Reserve and all the major financial operations of America take shape as per the instructions of this financial institution. In the given paper author has discussed the Federal Reserve interest policies and their several aspects, relevance, importance of the interest policies and how they affect America. Lowering or raising interest rates is meant to affect the demand of goods and services in a country. Majorly such demand is not related to the market but it is related to the nominal interest rate and its calculation with the expected rate of inflation.
The uncontrolled inflation is not considered in the interest of any economy and to prevent and check unwanted inflation, Federal Reserve makes policies considering the interest as well as expectation of the industry, business sector and common people because these policies to prevent inflation makes a longer impact on the various sectors of the society. Inflation affects the services and expectations of the providers and receivers at a large scale and it is a major concern for Federal Reserve while deciding the policies. While deciding such policies for the American economy the Federal Reserve keeps an eye on the global economy situations also as the policies of the other countries also can make a difference in the economy of other countries.
In America the monitory policies are decided by the Federal Reserve and on the current situation of the American economy Federal Reserve decides the taxes to rein the inflation, deflation and other situations that need attention. Since one economic policy is related to another and impacts other policies also, it is imperative to think and analyze the situation and then decide the policies seeing their long term impact on the economy of country and people.
Jones, D. M. (2002). Unlocking the secrets of the Fed: how monetary policy affects the economy. New Jersey: John Wiely & Sons Inc.