The monetary policy in the USA is shaped by the Federal Reserve (FED). The Fed has two fines: to achieve price stability and support full employment. Its main tool to achieve these goals is to adjust interest rates. When prices rise too quickly and inflation is above 2% of the Fed target, it raises interest rates, increasing the cost of the loan throughout the economy. This causes a stronger American dollar (USD) because it makes the US a more attractive place for international investors to park their money. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates to encourage loans that are weighing on the green garden.

The Federal Reserve (FED) organizes eight political meetings a year, in which the Federal Committee of the Open Market (FOMC) assesses economic conditions and makes monetary political decisions. Twelve Fed-Siedmiu officials of the Governors’ Council, president of the Federal Reserve Bank in New York and four of the other eleven regional presidents of the Bank of Reserve, who serve annually on the basis of trading, took part in FOMC.

In extreme situations, the federal reserve may resort to a politics called quantitative draw (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was a Fed weapon by choice during the great financial crisis in 2008. This includes Fed printing more dollars and using them to buy high -quality bonds from financial institutions. QE usually weakens the American dollar.

Quantitative twist (QT) is the opposite QE process, in which the federal reserve stops buying bonds from financial institutions and does not reinvest the capital from the bonds that it has in order to buy novel bonds. This is usually positive for the value of the American dollar.