Student’s Name
Institution Affiliation
Monetary Policies
Table 1: Effect of Monetary Policies on U.S. Macroeconomic situation from 2000 to 2010
| Period in Years | Fed Rates, Reserve Rates and Open market operations |
| 2000 | – Raised rates to 5.5% from 5.0% which resulted into decreased inflation to 2.7%, increased GDP to 4.7% and contributed to unemployment of 6%. |
| 2001 | – Fed rates were l
– owered to combat recession that resulted from the Afghanistan war and confront the effects of the September 2011 attacks. – Increased open market operation resulting into induced funds into the economy. – Reserve rates were reduced leading to increasing borrowing. |
| 2002 | – Reduced rates to 1.25% leading to increased prices in treasury bonds, increase in growth of productivity and falling in stock prices.
– Increased GDP growth to 1.8% – Unemployment remained unchanged at 6% while inflation increased to 2.4%. |
| 2003 | – Reduced rates to 1.25% leading to increased prices in treasury bonds, increase in growth of productivity and falling in stock prices. |
| 2004 | – Sustained rates to 1.25%. Reduced the subprime mortgage crisis
– Helped stimulate economic growth through funding, contributing to growth in GDP. |
| 2005 | – Raised rates. Resulted into reduced borrowing.
– Led to reduced inflation rate to 3.4%. – GDP growth increased to 3.3%. |
| 2006 | – Raised rates to 5.25%. Helped combat housing bubble.
– Led to reduced borrowing. – Unemployment remained at 6%. – GDP growth rate reduced to 2.4% |
| 2007 | – Reduced rates to 4.25%. Led to reduced housing sells. Increased inter-bank rates on loans. |
| 2008 | – Reduced rates to 0.25%. Led to tax rebate and increased borrowing.
– Inflation was reduced to 0.1% and led to increased GDP from -0.3% to 2%. – Unemployment remained unchanged at 6%. |
| 2009 | – Reduced rates to 0.25%. Led to tax rebate and increased borrowing.
– Employment increased to 12%, unemployment remained constant at 6%. |
| 2010 | – Reduced rates to 0.25%. Led to tax rebate and increased borrowing. |
Source: Federalreserve.gov. (2017).
References
Federalreserve.gov. (2017). Monetary policies. Retrieved from: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.html