TAILIEUCHUNG - Lecture Principles of money, banking, and financial markets (12th edition): Chapter 21 - Ritter, Silber, Udell

Chapter 21 - Monetary policy strategy. In this chapter you will learn to realize how the Federal Open Market Committee chooses an economic target and a policy lever to reach that target, understand the mechanics of the federal funds market and how the Federal Reserve can interact in that market. | Chapter 21 Monetary Policy Strategy Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Learning Objectives • Realize how the Federal Open Market Committee chooses an economic target and a policy lever to reach that target • Understand the mechanics of the federal funds market and how the Federal Reserve can interact in that market • Define the Taylor rule and explain its significance to monetary policy Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 21-2 Introduction • “Federal Open Market Committee (FOMC) seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output” • Examination of the formulation of policy through the Federal Open Market Committee’s directive • Review the reasons for the particular course of action that is followed Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 21-3 1 The FOMC Directive • The FMOC meets every five or six weeks – Review of recent economic and financial developments • • • • • • Prices Unemployment Interest rates Money supply Balance of payments Bank credit – Makes projections for the future – Based on anticipated economic conditions, proposes appropriate monetary policy Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 21-4 The FOMC Directive (Cont.) • The FOMC directive – In recent years, FOMC directive usually contains a single paragraph that begins with a general qualitative statement of current policy goals – Specifies the immediate prescription for implementing longer-term objectives – In outlining its operating targets, the Committee refers to conditions in the reserve markets, not in terms of money supply growth Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 21-5 The FOMC Directive (Cont.) • The FOMC directive (Cont.) – Although Fed emphasizes monetary and reserve aggregates, in practice it operates on interest rates (Federal Funds Rate) – After each meeting, the FOMC releases a statement •

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• Financial markets
• Financial institutions
• Monetary policy
• International finance
• Monetary theory
• Monetary policy strategy
• Lecture Financial markets
• Thị trường tài chính
• Financial futures markets
• Valuation of financial futures
• Interest rate futures
• Lecture Financial markets and institutions
• Financial institutions markets
• Capital markets
• Money markets
• Derivative securities markets
• Futures markets
• Option markets
• Swap markets
• Foreign exchange derivative markets
• Bank management
• Types of Financial Markets
• Securities traded
• Valuation of securities
• Money market yields
• Bond markets
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• Primary mortgage market
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• Economics 252
• Efficient markets
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• Efficient Markets Hypothesis
• Interest rate derivative markets
• Interest rate swaps
• Mortgage backed securities
• Globalization of mortgage markets
• Financial markets and institutions
• The financial system
• Interest rates change
• Financial markets efficient
• Term structure affect interest rates
• The stock market
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• The international financial system
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• Interest rates
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