03/17/14 Monetary Policy

• Monetary Policy
• Controlled by the Feds.
• Influencing the economy through changes in reserves which influences the money supply and available credit.
• Is a banker's bank.
• 4 Options of Monetary Policy
1. Reserve Requirement
• Percent that is set by the Fed if the minimum reserve a bank must have.
2. Discount rate
• Banks borrow money from the federal reserve
• Usually as a last resort. 
3. Federal Fund Rate
• Banks loan each other overnight funds.
4. OMO (Open Market Operation)
• Buy or sell securities (bonds) 
• If Feds buy bonds; increase money supply (expansion)