Monetary Policy of the U.S. Federal Reserve - Essay ExampleThis paper discusses the U.S. Federal Reserve's monetary policy. Most simple put the attempt by the Federal Reserve to establish balanced national income and help spur economic growth by controlling the size of the money supply is termed as monetary policy. It is implemented with the help of policy tools which usually consist of open market operations, discount rates, and reserve requirements. Open market operations are the strongest monetary policy tool consisting of the purchase and sale of treasury and federal agency securities. The federal open market committee normally specifies all short-term objectives related to open market operations. These objectives normally identify reserve targets or the desired federal funds rate. It is interesting to note that there have been diverse objectives over the years ranging from federal funds rate targets in the eighties to policy changes in the nineties. No matter what the short term objective the long term objective has always been price stability and sustainable economic growth.
