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.