Discuss in detail Based on the state of the US economy what

Discuss in detail: Based on the state of the U.S. economy, what should the Federal Reserve do with the federal funds rate?

Solution

Federal Reserve raised interest rate for first time in 9 years or last time it effected rise in interest rates in 2006. Fed aggressively lowered the federal rate to zero to deal with financial crisis of 2008. Now , Federal Reserve is targeting it between 0.25 and 0.5 %.

US economy has left behind the crisis days, and now unemployment rate has come down to 5.1 % level and growth has picked up to around 3 %.

These statistics indicate that US economy has recovered substantially and future predictions are also favorable.

Hence we can say that Federal Reserve is going to effect more hike in official interest rate.