Federal Reserve Project

In: Business and Management

Submitted By ballatravis10
Words 1762
Pages 8
The Federal Reserve (Fed) has served as the United States central bank and and as the lender of last resort since September 23, 1913. It was created to address banking panics and the problems caused by bank runs. Over the past 100 years the Fed has been implementing policies and these have changed as society has become more technologically advanced. Ultimately, their purpose is to establish stability in the United States monetary policy. Which includes their goals of maximum employment, stable prices (controlling of inflation), and moderate long-term interest rates. They achieve their goals by controlling the currency in circulation, using open market operations, and establishing an effective fiscal policy. In preparing this report I will analyze the decisions of the Fed for the past year. I will interpret their actions as they pertain to their previously stated goals. I also intend on analyzing current policies in wake to this global economic downturn. I will also make predictions pertaining to near future actions of the Fed. Using these current events I will show my understanding of how the Fed is working now, how they have worked in the past, and what the future decisions might look like.
Federal Funds Rate
The Federal Funds Rate or fed funds rate is a very important benchmark for interpreting the actions of the Fed. Every bank in the United States is required to keep a predetermined percentage of deposited money in reserves. This protects the customers that keep their money deposited in the banks. This reserve money is stored that the Federal Reserve Bank or in a cash vault. The Fed funds rate is the interest rate which a bank can borrow reserve funds from another bank that have excess reserves in order to meet that predetermined percentage of reserve funds.
The Fed can use their policies to influence the fed funds rate. Currently the fed…...

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