In this module, we learned about the impact of various elements on the financial management process. This includes actions taken by the Federal Reserve. One of the functions introduced in Chapter 15 includes changing the “discount rate.” The discount rate is the interest rate that it charges on loans to commercial banks and other depository institutions. Changes in this rate can trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.
Visit the Meeting calendars, statements, and minutes section of the U.S. Federal Reserve Federal Open Market Committee. If this page does not load, type “FOMC meetings” in the “Search” box located on the U.S. Federal Reserve home page. Next, select a date from any year and click on the “Statement” link. Respond to the following questions by posting 1-2 paragraphs for each item:
- What action did the Committee take on this date?
- What comments (if any) were made with respect to economic growth and/or core inflation?
- Comment on any other concerns or issues indicated in the release.
- What impact does this announcement have on the interest rate that could be charged to a company who is trying to obtain a loan to expand its operations?
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