Federal Open Market Committee Discussed Several Important

¶ … Federal Open Market Committee discussed several important issues during their meeting of September 17th and 18th of this year. Naturally, the issue of the economy and specific items related to the national financial situation were of primary importance for all present.

One of the topics was the current economic situation and the federal debt, as well as any new developments which have been made toward the bettering of national circumstances. In the last few months, the committee has begun work to establish a "fixed-rate, full-allotment overnight reverse repurchase agreement (RRP) facility" (Minutes 2). Many benefits were attributed to the construction of such a facility including the ability to manage interest rates and support the idea of a floor to determine rates. During the September meeting, the research into this facility was further explored and it was ultimately determined that additional research must be done before going ahead with the project.

The committee discussed the economy and found that there has been improvement, including increase in jobs creation and a higher employment rate for American citizens. It can now be reported that the average unemployment rate in American has dropped to 7.3%, a huge improvement given the situation just a few years ago where nearly 10% of people were out of work. Other positive indications that the economy was heading in the right direction included an increase in manufacturing and production, home prices also increased, and businesses increased expenditures which indicates levels of expansion for these enterprises. Some factors with potentially negative connotations were also discussed, including decreased government spending (3). Inflation rates also increased in the United States, most notably in American food costs. Although financial stability is increasing, there are still real risks to consider which could undermine the progress.

Projections were made about future economic growth and what rates were expected to exist in the coming three years. This portion of the meeting seems to have had a negative undertone. Concerns were expressed for the increase government debt and the impending debt ceiling as well as the discussion of a potential government shut down. The concerns were well-founded and expressed with real care for both the financial circumstances of the government, but of the population as well. Although positive rates were already discussed, there was a general consensus that for people who had been unemployed for longer terms, there was a growing unlikelihood of financial solvency. The positive numbers did not take into account providing for these people. Specific programs, including purchases were debated in light of impending and current issues.