Question
The responsibility of the US Federal Reserve is to monitor inflation and unemployment. Its main tool is adjusting the interest rate it charges member banks
The responsibility of the US Federal Reserve is to monitor inflation and unemployment. Its main tool is adjusting the interest rate it charges member banks to borrow. As the economy slows, it lowers rates to encourage investment to stimulate growth; as the economy heats up and signs of inflation appear, it raises rates to dampen growth. This base rate affects all other bank rates including the prime rate and, thus, the rate you and I pay on our mortgage. Recently, the Fed pushed rates down to "near zero percent" in response to the impact the covid-19 lockdown would have on the economy. At this point, almost $5Trillion of stimulus money has been injected into the economy and more is proposed by the administration but is getting strong resistance from Congress. Job availability is improving, unemployment is trending down, US GDP growth in the most recent quarter was 2% and there is concern about inflation as prices for goods and services have surged.
Read the attached article and comment on "During times like this, what is the best strategy to survive the tough economy we are facing?"
https://www.imf.org/en/News/Articles/2022/07/11/CF-US-Economy-Inflation-Challenge
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