Poland 's Tight Monetary Policy

Identify clearly what these lessons are, how they will be acted upon and what is expected to change as a result

This article presents the fundamental reasons behind the Fed’s cautiousness in raising the interest rates, why it is more likely that interest rates will rise in December, and what some possible outcomes of rising interest rates could be.

Monetary policies are ways that the Federal Reserve relies on to reach full employment, often targeting an inflation rate or interest rate to ensure price stability and it should be free from political influence. Through forward guidance the Federal Open Market committee (FOMC) provides to households, businesses, and investors about where the monetary policy stands and is expected to prevail in the future, given the current economic outlook. They try to fix the economy by regulating inflation because it will lead to a decline on the purchasing power. Monetary policies are to achieve low employment, stable prices and low interest rates. By enforcing effective monetary policy, the Fed tries to maintain stable prices and so to support conditions

In other words, Monetary policy can be looked at as a policy that is money-based that involves banks that manage liquidity to create the growth of money. This includes the use of checks, cash, and credit that are used in the money market as primary ways of investing money. The most important of these is credit would be one of the most important tools used in the market because it consist of loans that are written promises to pay money back. Within every policy that every nation has there will always be an objective at hand. The U.S. Federal Reserve, like many other banks around the world, has clearly stated targets for their goals. They look for a certain percent of people who want to work but cannot find a job and the find that the rate of

The action of the Federal Government poses a great impact on the status of the economy, the livelihood of the people, and the way other nations will react. The reality of recession differs from one environment to another, but the meaning of recession is the same. If policy makers and government officials ignored the outcry from their nation over a recession, then the results would lead to a depression.

Monetary policy is used by the Fed to regulate the supply of money and credit in the economy. The purpose of monetary policy is to promote maximum employment, maintain the price of goods, and to control long-term interest rates to increase economic growth. Right now, monetary policy and fiscal policy are accommodating. At this point, the inflation rate is too low at 0.1 percent, which indicates some uncertainty in the economy. Inflation rates that are too low or too high may cause deflation. Deflation is the sustained decline in the average of all prices of goods and services (Miller, 2016, p.157). Deflation can also lead to recession due to limitation of spending. If prices never change or are predicted to drop, then consumers tend to wait to purchase products in order to receive the lowest price possible (The Associate Press, 2014). Lower inflation rates will impact the sale of blood glucose meters because people will delay spending disposable income on meters and strips.

The United States has always been recognized for being willing and able to support each other and emphasize our amability with one another in time of difficulties. Since 2008, Americans have donated $19.1 million to the U.S. Treasury to help pay down the national debt. The recession was caused by a drop in stock market, increase in unemployment which is referred by economists as people that are not currently working but actively looking for work and a decline in housing market and many other reasons.

By the end of 2008, the European Union began experiencing rippling effects of the United States financial crisis. Several member countries, most notably on the southern end of the continent, faced high levels of debt and unemployment. Portugal, Iceland, Ireland, Greece, and Spain, derogatively referred to as “PIIGS,” required extensive economic support from the EU in order to repay government debts and bail-out private banks. Disbursal of aid in 2010 proved successful in promoting economic recovery in some countries; however, the vast majority observed only slight economic improvement which led to doubts regarding the effectiveness of the harsh austerity measures implemented. Ireland has most clearly benefited from the financial support of the European Union as the country’s unemployment rate has dropped below ten percent and is expected to witness 4.5% GDP growth in 2016. Portugal, on the other hand, shows little fiscal improvement as evident in an unemployment rate of 13% and an expected GDP growth of only 1.6% in 2016. Although both countries faced tough financial crises in 2010, Ireland has notably outperformed Portugal in resolving the situation. The weak economy in Portugal, as well as continued fiscal hardship in the remaining “PIGS” countries, threaten the preservation of the European Union as financial inequality between the members persists.

One of the challenges is to manage the money supply in order to combat inflation and assure stable prices. The current plan which should ease inflation “is to provide support to the economy through monetary easing, while maintaining the pace of structural fiscal consolidation”(Central Intelligence Agency ). Another idea that could help is if the central bank raised interest rates which would promote investing or saving and would reduce borrowing. If inflation spikes and unstable prices occur Poland would be crippled and growth would be prevented and perhaps digress.

After the economy decline in 2008, many countries adopted different models and strategies to help revive its economy, not practically analysing the negative impact these strategies could have on the average citizen. The credit crunch made countries analyse their various services thereby enabling them to identify areas that needed a different managerial approach. One of the approaches adopted by the UK to help

The terrible internal economies control. The countries in euro area, especially Portugal, Ireland, Italy, Greece, and Spain lost their control over the domestic financial situation. Specifically, Greece had long standing financial problems. The government spent largely on the social welfare, and had a great number of public servants who had extremely generous wage and pension benefits. Besides, the government had little control over its budget deficit, leading a long standing financial budget overrun. In Ireland, the estate bubble greatly destroyed government tax income and consumption power of public. Portugal’s lasting recruitment policies led to a great number of redundant public servants. The Italian economy suffered from the high unemployment rate and high tax rate, and had a slow growth in recent years.

Between 2007 and 2010, the United Kingdom's economy dropped like never before, with the largest deficits in the budget being experienced in 2007. The country could hardly sustain its economy, and relied greatly on borrowing from other governments abroad. Earlier in 2006, the country had experienced a deficit of over 3.0 %. In 2007, the deficit came to 2.75%, and all the potential businesses were affected as the previous investments in business fell from over 11% to around 10.25% of the entire Gross Domestic Product (GDP). In 2009, the situation got worse, with the investments into business by the government dropping rapidly from the 'normal', which was over 25%, to an average of 8.75% of the country's GDP. At almost the same time, the financial systems in the U.K were affected by the financial disability, and investors carefully withdrew their assets due to the risks that cropped up. This led to a deep and extreme recession in U.K, between 2008 and 2009 (Giudice, et al, 2011, p. 21)

During the global financial recession when all the economies of the world were badly hit, Poland continued to grow. According to (United Nations Statistics, 2012) it was the only European country, which despite economic recession continued to record a growth rate of 1.7% in 2009. This was the period of enormous success for the country; it enjoyed and celebrated its success. This achievement made Poland prominent on the pages of global economy. Donald Tusk-the Prime Minister of Poland with regards to the economic success of Poland said (Global Post):

Macro-economic policy is designed to achieve the aims of full employment, stable prices and sustainable development. In order to achieve them, policies and targets are set by governments. These policies are mainly monetary and fiscal. In this essay, I will examine the aims and policy objectives which UK governments have pursued from the credit crunch of 2008 up to the present time.

In September 2008, thousands of financial sectors all over the world went bankrupt like dominoes after the failure of Lehman Brothers Bank, which is also known as the Financial Crisis of 2008, caused the severe recession of the economies around the world. In order to help the country out of crisis, the central banks in different countries had to take measures to stimulate the growth of economy. The goal of this essay is to introduce the measures that Bank of England have taken in 2008 of financial crisis and will discuss the macroeconomics consequences and effects. Three measures taken by Bank of England will be presented in first section and how macroeconomics outcomes influenced by policies and objectives will be discussed in the second section.