Financial Markets - Relations Economic growth and Financial markets - Current issue: Corona virus and economic growth
18 important questions on Financial Markets - Relations Economic growth and Financial markets - Current issue: Corona virus and economic growth
Responsibility for Monetary Policy: US
Central Bank: Federal Reserve (FED)
- Board of governors, Chairman: Jerome Powell
- FOMC ( Federal Open Market Committee)
Government:
- Congress
- President of USA
Responsibility for Monetary Policy: Eurozone
Central Bank: ECB
President: Christine Lagarde
(until end of October 2019 is/was Mario Draghi)
Monetary policy in the US : Objectives
Goals:
- Price stability ( key goal)
- Maximum employment
- Moderate longterm interest rates
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
Central Bank operationalization price stability ( U.S.)
Definition price stability: officially not defined
Core inflation rate: average 2% a year ( was until August 2020, 2% a year)
Economic decisions are not disturbed by expected inflation
Central Bank operationalization price stability (EU)
Definition price stability:
A harmonised consumer price index of between 1 and 2%
Monetary policy - decision making strategy (U.S.)
Policy based on:
- Business cycle, output gap
- and a variety of other economic indicators.
Monetary policy decision making strategy (Euro zone)
Policy based on:
- 2 'pilars' :
- Other inflation indicators (e.g. Business cycle, prices of raw materials, wages, yield curve)
Central bank (CB) in the Euro zone: Dependency
Main official interest rate EU:
Monetary policy : Choosing policy tools
- Quantity measures: (target on monetary aggregate)
- Pricing instruments ( target on short interest rates)
Monetary policy ECB
The primary objective of the ECB's monetary policy is to maintain price stability.
This is the best contribution monetary policy can make to economic growth and job creation
What does Monetary policy do?
The ECB's monetary policy strategy
The ECB has adopted a specific strategy to ensure the successful conduct of monetary policy.
Defines price stability as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%
In the pursuit of price stability, the ECB aims at maintaining inflation rates below, but close to, 2% over the medium term.
The strategy also includes an analytical framework for the assessment of all relevant information and analysis needed to take monetary policy decisions.
Minimum reserve requirements
Open market operations
Buying or selling short-term financial assets from commercial banks (e.g. Government bonds) to keep interbank interest rates at a specified target value
a.) main refinancing operation ( or minimum bid rate)
b.) fine tuning operations
Monetary policy Federal Reserve Bank (FED)
Sets U.S. Monetary policy in accordance with its mandate from Congress to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. Economy
FED achieves these goals by managing the level of short-term rates- specifically, by setting a target (or target range) for the federal funds rate, which is an overnight, unsecured, interbank borrowing rate.
The level of short-term interest rates then influences the availability and cost of credit in the economy, and, ultimately, the economic decisions made by businesses and households.
The Federal Reserve has a variety of tools for implementing monetary policy
The Board of Governors of the Federal Reserve System ( Board of Governors) is responsible for tools such as:
- the discount rate
- reserve requirements
- interest on reserves
- Federal Open Market Committee (FOMC) is responsible for open market operation
Quantitave Easing (QE) unconventional form of Monetary Policy
- Expansion of Central banks balance sheet or large-scale asset purchases _ liquidity is injected directly into the economy
CB purchases at a large-scale financial assets like government bonds from commercial banks _ prices↑ and yield (interest rates) ↓
- Aim: to spur inflation when standard expansionary policy has become ineffective
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
