Economists View of Current Monetary Policy
Chart of the Week for March 27, 2015 - April 2, 2015
U.S. monetary policy is reflected in what the U.S. Federal Reserve Board ("Fed") does to influence the amount of money and credit in the U.S. economy. Fed monetary policy actions directly impact short-term interest rates, and influences long-term interest rates and the performance of the economy. According to the National Association for Business Economics ("NABE") March 2015 survey, fifty-eight percent of economists surveyed feel that current monetary policy is about right, thirty-six percent think that current policy is too stimulative, three percent see current policy as being too restrictive, and 3% didn't know or had no opinion.
The Fed's mission is to serve its dual mandates to influence inflation and employment. Seeking to fulfill that mission, the Fed ended its bond buying program and modified its quarterly statements regarding possible future interest rate increases in 2014. As noted in NABE's survey results above, there are differences of opinion among economists on how the Fed is doing with regard to monetary policy. The economy is so complex that even economists who have studied the economy, have historical knowledge of economic events, and have economic models and tools cannot predict future economic conditions with absolute certainty.
The state of an economy fluctuates over time and many factors influence market conditions. Investors can feel uncertain when trying to make investment decisions based on current economic conditions, but they can look to this survey and be assured that they are not alone. When making investment decisions, prudent investors should invest based on their own circumstances taking into consideration their goals, investment experience, time horizon and risk tolerance.
Posted by: sarah_oz@yahoo.com
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