The Economic Perspective: “The Fed’s New Policy”

Mary:    I’m Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at the Fed’s new policy.   Mike, the Federal Reserve recently announced a change in their interest rate policy.  What was the change, and why is it important?

 

Mike: Summary Answer

  • Federal Reserve can influence the level of interest through its buying and selling of financial securities
  • Generally, Fed will lower rates if wants to stimulate the economy and lower unemployment
  • Fed will raise rates if wants to slow the economy and cut inflation
  • Recently Fed said it will look at a much longer period of economic performance before changing interest rates
  • Since interest rates are now at historic lows, many interpreted this to mean the Fed wants to keep those low rates for a longer period of time
  • Fed is clearly focusing on economic and job growth, and not worried about inflation
  • I’m MW

 

Mary: And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.