I two seperate responses to this discussion. 120 words at least for each respons


I two seperate responses to this discussion. 120 words at least for each response. Thanks
MBA 701 – Economic Analysis for Management: Discussion #7
The Federal Reserved discussed several different factors to consider during the Federal Reserve Open Market Committee (FOMC) during the March 15-16 2022 meeting (Board of Governors of the Federal Reserve System. (n.d.). The first and probably largest factor mentioned was the war in Ukraine. The war had several impacts on the global economy. Some of the impacts are on liquidity and inflation because of what has been happening in the western European country.
Some of the other factors mentioned in the report were the progression of inflation, supply chain issues and a constrained labor market. All of these are impacting the economy in different ways. In light of all of these factors, the Federal Reserve has decided to raise the federal funds rate by ¼ of a percent.
When looking at all of the factors, the highlight is that inflation is on the rise for the first time in several years. Considering several other factors that our out of the control of monetary and fiscal policymakers that can also increase inflation, I agree that raising the fed funds rate is the right move. Inflation is already at a multiyear high and it is a months long process for interest rates to take effect. Take action now is the right move.
Business managers should be interested in the fed fund rate primarily because it affects liquidity and the rates at which businesses borrow month. The higher the rate, the more expensive it is to borrow money. If it costs more, then companies will borrow less, thus spend less.
These actions affect the economy because if business are spending less then it slows down the economic cycles of the economy. Higher rates equate to decreased research and development, capital expenditures, workforce employment, etc…
The Federal Reserve in conjunction with the Federal Reserve Open Market Committee (FOMC) actions are considered monetary policy. This is separate from what Congress and the President do with creating and amending laws which is labeled fiscal policy. The course text refers to monetary policy as the changes to interest rates and other tools available to a central bank such as the United States Federal Reserve or European Central Bank (ECB) (Copper & John, 2015). While monetary most often results in changes to interest rates, fiscal policy involves laws that impact how much money the government spends or taxes is constituents.
In this meeting, the participants seemed focused on the inflationary pressure and high amount of liquidity in the market. Their actions demonstrate a direct action to counteract those concerns. I agree with their actions and will be interested to see the results in the months to come.


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