Monetary Policy & Politics April 13, 1999

Role of the Federal Reserve Board in Macro Policy Conducting the nation's monetary policy by influencing the money and credit conditions in the economy in pursuit of full employment and stable prices Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers

Role of the Federal Reserve Board in Macro Policy Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets Providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments system.

The Federal Reserve Banks

Politics and the Federal Reserve Board The Fed as a bank is more concerned about inflation than unemployment The timing of interest rate changes can affect political outcomes The Fed can affect presidential policies by impacting the money supply. The Fed can be held as a scapegoat and make decisions that the politicians will not make.

Economics and Politics Bush and Re-election bid It’s the economy stupid! President’s are held accountable for the macro economy Perception about the economy may be more important than reality