The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed. The most recent meeting was May 2. There is general consensus among economists that there has been significant economic expansion in the business cycle throughout 2015 through 2018. Some sectors of the economy are doing well but other sectors are not. The stock market is doing great and the housing markets, in some regions, are recovering very nicely from the Great Recession. The unemployment rate, currently at 4.7%, is low – close to full employment. The main problem is that real wages are not increasing as rapidly as desired. The data is giving conflicting signals, as usual. If we are headed into a sustained economic expansion, low interest rates could be inflationary – and once that gets started, it’s hard to put that genie back in the bottle. So in each of their March and June meetings, the FOMC decided to increase their target Fed Funds Rate by one quarter point. It now stands at 1.75%. Does the Fed want to continue increasing rates or adopt a more stimulatory (“accomodative” in Fed-speak) monetary policy?

To read the summary of the March meeting, click here:

Suppose you were a voting member of the Federal Open Market Committee. Would you vote to implement monetary policies that would speed the economy up (to fight unemployment), or slow it down (to fend off potential inflation) — and why?

In your submission, you’ll need to address the following question. What did the FOMC decide at their meetings on May 1 & 2, and what should it decide to do at the June 12/13 meeting? I’m giving you a lot of latitude in this Discussion Topic to tell me about the current state of the economy, the proper role of monetary policy (i.e. raise or lower rates), and how effective that would be compared to fiscal policy. Use this as an opportunity to show me how much you’ve learned about the role of the Fed and monetary policy in our economy as you are preparing for Test 6. Your submission to this Discussion Topic is due by midnight Monday, 5/7.

To earn all 3 points, your opinion must be backed by rigorous economic reasoning. It’s fine, even encouraged, to do research on the Internet, but if you use another person’s words, you must reference it. Quotes are fine here and there, but if you simply copy and paste someone else’s work, even though you may reference it, you’ll earn very few (if any) points. Before you actually post your submission, you should write a couple of drafts to make sure it is articulate, grammatically pretty good, and makes good economic sense. This Discussion Topic closes at midnight Monday, December 4th. I have some high expectations, based upon your recent submissions. Post questions and comments regarding this Discussion Topic to the Mechanics and Logistics forum on the DISCUSSION BOARD. Let’s save this forum for content only.