The Reserve Bank Of Australia (RBA)

The Federal Reserve has the dual job of ensuring price stability and maximum employment, which are contradictory objectives. The Feds try to achieve the goals through monetary policy which determines the demand and supply of money by controlling interest rates. The Fed’s goal is to achieve a natural rate of unemployment of more or less 5%. When the actual unemployment figures are below the natural rate of unemployment, inflation increases and there is a high demand of goods and services propelling the economy with the ensuing labor demands and the pressure it places on wages, which in turn produces inflation. When the Fed is faced with this scenario, it must increase the rates to slow the growth and achieve price stability (contractionary cycle).

The Federal Reserve is the single entity in control of the monetary policy of the United State of America. Monetary policy is the process that the Federal Reserve takes in order to control the supply of money and to attempt the control the direction of interest rates. The reason for doing these actions is in attempt to control the country’s inflation and employment rates, which are the biggest indicators and factors of a healthy economy.

In the current year, there is uncertainty of the economic performance globally and the condition on housing market continues to vary over the country. Therefore, RBA recently decided to keep the interest rate at 1.5 percent – which is unchanged for several months – to maintain the sustainable growth and achieve the inflation target (RBA, 2017).

The Federal Reserve System has three branches: the Board of Governors, The Federal Open Market Committee, and Reserve Banks. The Federal Reserve System (Fed) supplies and regulates America’s money to all the banks. The Board of Governors is the main authority of the three branches of the Fed, and it supervises other banks. The Federal Open Market Committee is the most prominent policymaker of the three branches and regulates the supply of money in the economy. Federal Reserve Banks serve other banks, this is why they are called banker’s banks. There are twelve Federal Reserve Banks which represent different states and these “districts” share data for monetary policies. The future role of monetary policy is vital

The discussion of whether the Federal Reserve should raise the federal funds rate is a highly contentious one. Members of the Federal Reserve (“Fed”) and academic economists disagree about what constitutes appropriate future macroeconomic policy for the Unites States. In the past, the Fed had been able to raise rates when the unemployment rate was under 5% and inflation was at a target of 2%. Enigmatically, since the Great Recession and despite a strengthening economy, year-over-year total inflation since 2008 has averaged only 1.4%—as measured by the Personal Consumption Expenditures Price Index (“PCE”). Today, PCE inflation is at 1-1.5% and has continuously undershot the Fed’s inflation target of 2% three years in a row. (Evan 2015) In the six years since the bottom of the Great Recession the U.S. economy has made great strides in lowering the published unemployment rate from about 10% back down to about 5.5%. In light of this data, certain individuals believe that the Federal Reserve should move to increase the federal funds rate in 2015 because unemployment is near 5% and inflation should bounce back on its own (Derby 2015). However, this recommendation is misguided.

To begin, the article explains the Federal Reserve’s plan to take a careful approach to enacting contractionary monetary policies, policies used to decrease money supply, in the future. Last December the Federal Reserve raised the interest rates after they had been near zero for years to ensure inflation was kept in check and to promote economic growth. It appeared the economy would be in for another increase in the interest rates sometime this year, but the Feds have rethought that strategy. If the Federal Reserve were to continue to raise interest rates it would have short-run and long-run effects on the Money Market, Goods and Services Market, Planned Investment, Phillip Curve, and Aggregated Supply and Demand. These effects are aspects that have to be considered because they express and explain the effects the increase in interest rates has on the economy and explain if the Federal Reserve is enacting the correct policy to achieve their goal.

The goals that the Federal Reserve has for its monetary policy is to keep maximum employment along with other reasons. In addition to that another goal the FED has is to stabilize prices and moderate long term interest rates. This is states in the first line of the article. Congress supplied these goals to the Federal Reserve Act.

The role of the RBA is to create and govern its monetary policy and prints and issues the country`s currency. It aims to foster financial system stability and promotes the safety and efficiency of the payment system. RBA also offers banking services to the government. It also manages Australia`s gold and foreign exchange reserves.

Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.

To achieve a rate of monetary expansion consistent with the target range, the Bank of Canada uses its effect on short-term interest rates.

The Reserve Bank signs an agreement called the Policy Targets Agreement with the Government through Financial Minister to maintain the inflation between one and

The US economy was finally taken off extreme life support when the Federal Open Market Committee (FOMC) raised the federal funds target for the first time in nearly a decade at last week’s policy meeting to 0.5%. In contrast to September, when the FOMC shocked markets by failing to raise the policy rate, there were no major surprises embedded in the press statement. The Fed viewed current growth as being moderate due to a solid domestic economy being offset by some external weakness. Meanwhile, outlook risks for growth and the labour market were deemed to be balanced. From the perspective of financial markets, the FOMC conveyed that it did not believe monetary policy was tight. Conditions remain accommodative. The path of future interest rate rises is expected to remain gradual, but this outlook is based on a forecast and is, therefore, not guaranteed. The continuation of monetary accommodation increases the chances of further labour market tightening and inflation eventually returning to the 2% target. The importance of the future path of actual inflation was also stressed. Significant deviation between forecasts and observed outcomes could impact the pace of subsequent policy rate increases. The baseline outlook for Fed policy in 2016 remains unchanged: four increases in the federal funds rate of 25 basis points. Commentators appeared pleased with the quality of the Fed’s communication, particularly given the criticism following the decision

Reserve Bank of Australia (RBA) is the central bank of Australia. RBA was formed in 1959 to replace Commonwealth Bank of Australia. Commonwealth Bank was set up by the Federal Government in 1911. RBA is responsible to take over central banking roles that previously taken care by Commonwealth Bank. After the take over, RBA keep improving their banking system and provide different banking services. The role of RBA is to perform the monetary policy in order to preserve a strong financial system and subject to the Australian Dollar’s currency.

The Policy Target Agreement (PTA) is an agreement between the Governor of the Reserve Bank and the Minister of Finance. “The Reserve Bank is required to conduct monetary policy with a goal of maintaining a stable general price level.” The economic objectives that the government uphold is encourage and open and competitive economy with the important factors of delivering constant high incomes and standards of living for New Zealanders. “Price stability plays an important part in supporting this objective.” The Bank has to track prices as well as asset prices. The bank has a inflation target of 1 to 3 per cent, they have to focus on keeping future inflation rate within the target of 2 percent midpoint.

Ideally, members would like to see lower levels of U6 labour market underemployment, but they are also cognisant of the need to make a pre-emptive strike against a build-up in inflationary pressures without damaging labour demand. Fed officials have been warning financial markets to expect a faster pace of tightening in 2017 versus last year. Policy changes need, however, to be put into context. The FOMC’s current baseline economic outlook would suggest 2 or possibly 3 rate hikes during the year. These would happen in June and December, along with September if there are 3 hikes. Meanwhile, markets have become jittery about whether the FOMC plans to boost the number of rate hikes this year. Ultimately, unfolding economic data will determine any changes to the FOMC’s baseline economic outlook, and, consequently, the forward policy path. To justify an increase in the federal funds rate being brought forward from June to March, the FOMC will need to play a hunch about evolving economic data, as well as potential developments in the realm of fiscal policy. Furthermore, members also need to decide whether unfolding economic data risks blowing the Fed off course in achieving its dual mandate without resorting to a faster pace of tightening.