| The Present (15 minutes) |
| Monetary Policy -- The Present |
A special thank you goes to:
The Council on Economics Education (councilforeconed.org) for accepting my proposal to present at the
62nd Financial Literacy & Economics Education Conference in Fr. Lauderdale, Florida, on September 24, 2023.
The Council on Economics Education (councilforeconed.org) for accepting my proposal to present at the
62nd Financial Literacy & Economics Education Conference in Fr. Lauderdale, Florida, on September 24, 2023.
The Foundation for Economics Education (teachers.fee.org), established in 1946, that provided funding for
me to present at this conference. FEE.org provides "FREE" economics curriculum for teachers to use inside
and outside their classrooms.
me to present at this conference. FEE.org provides "FREE" economics curriculum for teachers to use inside
and outside their classrooms.
The Federal Reserve Bank of St. Louis for allowing the public to use their important graphing resources --
(FRED) -- to help economics educators get the most up-to-date information on economic data at our finger
tips.
(FRED) -- to help economics educators get the most up-to-date information on economic data at our finger
tips.
| Setting Today's Goals for the FED was The Federal Reserve Reform Act of 1977 |
| Steven M. Reff Economics Lecturer University of Arizona (2007 - 2016) The 2015 University of Arizona Five-Star Faculty Award |
| Teach the Differences Among |
| To use the interactive Dual Mandate Bullseye follow the directions underneath the graph. |
On the Dual Mandate Bullseye below:
shown on the x axis is the unemployment rate. The bullseye indicates where the Natural Rate of Unemployment lies at a
certain period of time. The natural rate of unemployment is the unemployment rate that would exist when the economy
produces full-employment real output (representing Maximum Employment).
shown on the y axis is the inflation rate determined by the Personal Consumption Expnditure Index, an inflation index
used by the Federal Reserve. The FED targeted inflation rate is 2% (representing Stable Prices).
shown on the x axis is the unemployment rate. The bullseye indicates where the Natural Rate of Unemployment lies at a
certain period of time. The natural rate of unemployment is the unemployment rate that would exist when the economy
produces full-employment real output (representing Maximum Employment).
shown on the y axis is the inflation rate determined by the Personal Consumption Expnditure Index, an inflation index
used by the Federal Reserve. The FED targeted inflation rate is 2% (representing Stable Prices).
2023 Federal Open Market Committee (FOMC) Committee Members
• Jerome H. Powell, Board of Governors, Chair
• Michael S. Barr, Board of Governors
• Michelle W. Bowman, Board of Governors
• Lael Brainard, Board of Governors (resigned February 14)
• Lisa D. Cook, Board of Governors
• Philip N. Jefferson, Board of Governors
• Christopher J. Waller, Board of Governors
• John C. Williams, New York, Vice Chair
• James Bullard, St. Louis
• Susan M. Collins, Boston
• Esther L. George, Kansas City
• Loretta J. Mester, Cleveland
• Jerome H. Powell, Board of Governors, Chair
• Michael S. Barr, Board of Governors
• Michelle W. Bowman, Board of Governors
• Lael Brainard, Board of Governors (resigned February 14)
• Lisa D. Cook, Board of Governors
• Philip N. Jefferson, Board of Governors
• Christopher J. Waller, Board of Governors
• John C. Williams, New York, Vice Chair
• James Bullard, St. Louis
• Susan M. Collins, Boston
• Esther L. George, Kansas City
• Loretta J. Mester, Cleveland
2023 Board of Governors of the Federal Reserve System (FRB)
• Jerome H. Powell, Board of Governors, Chair
• Michael S. Barr, Board of Governors, Vice Chair for Supervision
• Michelle W. Bowman, Board of Governors
• Lael Brainard, Board of Governors, Vice Chair
(resigned on February 14, 2023 to become the Director of the
National Economic Council at the White House)
• Lisa D. Cook, Board of Governors
• Philip N. Jefferson, Board of Governors
• Christopher J. Waller, Board of Governors
• Jerome H. Powell, Board of Governors, Chair
• Michael S. Barr, Board of Governors, Vice Chair for Supervision
• Michelle W. Bowman, Board of Governors
• Lael Brainard, Board of Governors, Vice Chair
(resigned on February 14, 2023 to become the Director of the
National Economic Council at the White House)
• Lisa D. Cook, Board of Governors
• Philip N. Jefferson, Board of Governors
• Christopher J. Waller, Board of Governors
The maximum number of members who sit on the Federal Open
Market Committee (FOMC) consists of 12 members. Notice above
that the FOMC had this maximum number as of February 13:
7 members of the Board of Governors of the Federal Reserve
System as of February 13, 2023.
1 President of the Federal Reserve Bank of New York always
sits on the FOMC
4 of the remaining eleven Reserve Bank presidents, who serve
one-year terms on a rotating basis. (See district bank map below)
Market Committee (FOMC) consists of 12 members. Notice above
that the FOMC had this maximum number as of February 13:
7 members of the Board of Governors of the Federal Reserve
System as of February 13, 2023.
1 President of the Federal Reserve Bank of New York always
sits on the FOMC
4 of the remaining eleven Reserve Bank presidents, who serve
one-year terms on a rotating basis. (See district bank map below)
The maximum number of governors who sit on The Board of
Governors of the Federal Reserve is 7 governors.
Notice above as of February 13, 2023 the Board had the maximum
number.
The members of the Board of Governors of the Federal Reserve
System are nominated by the President and confirmed
by the Senate. A full term is 14 years.
The Chair and the Vice Chair of the Board, as well as the Vice
Chair for Supervision, are nominated by the President from among
the members and are confirmed by the Senate. They serve a term
of four years.
Governors of the Federal Reserve is 7 governors.
Notice above as of February 13, 2023 the Board had the maximum
number.
The members of the Board of Governors of the Federal Reserve
System are nominated by the President and confirmed
by the Senate. A full term is 14 years.
The Chair and the Vice Chair of the Board, as well as the Vice
Chair for Supervision, are nominated by the President from among
the members and are confirmed by the Senate. They serve a term
of four years.
The interest rate on reserve balances (IORB rate) and the primary
credit rate (formerly known as the discount rate) are determined
by the FRB). IORB is the primary tool for the Federal Reserve's
monetary policy.
credit rate (formerly known as the discount rate) are determined
by the FRB). IORB is the primary tool for the Federal Reserve's
monetary policy.
| The Board of Governors meet every other Monday. |
| The Federal Open Market Committee (FOMC) that meets 8 times each year. Remember this Committee also includes the members of the Board of Governors. |
12 Federal Reserve District Bank Presidents
The New York Federal Reserve District Bank President and
4 Federal Reserve District Bank Presidents sit on the
Federal Open Market Committee (FOMC)
The remaining 7 Federal Reserve Bank Presidents attend
the FOMC meetings and bring their district board reports
to help advise The Board of Governors on the
Primary Credit Rate (formerly entitled the Discount Rate)
that should be administered. The Board of Governors
then makes the final decision on this rate.
The New York Federal Reserve District Bank President and
4 Federal Reserve District Bank Presidents sit on the
Federal Open Market Committee (FOMC)
The remaining 7 Federal Reserve Bank Presidents attend
the FOMC meetings and bring their district board reports
to help advise The Board of Governors on the
Primary Credit Rate (formerly entitled the Discount Rate)
that should be administered. The Board of Governors
then makes the final decision on this rate.
| The Federal Open Market Committee (FOMC), the Board of Governors, and the 12 District Bank Presidents |
Students must have an understanding of the three entities involved in setting the direction of monetary policy (FOMC, Board of Governors, and the
12 District Bank Presidents) before learning about the FED's Ample Reserves policies.
12 District Bank Presidents) before learning about the FED's Ample Reserves policies.
The Board of Governors of the Federal Reserve
System and the Federal Open Market Committee
shall maintain long run growth of the monetary
and credit aggregates commensurate with the
economy's long run potential to increase
production, so as to promote effectively the
goals of:
Maximum Employment
Stable Prices
Moderate Long-Term Interest Rates
NOTE: Even though the FED was assigned three
goals, it has long been termed The Dual Mandate of:
Maximum Employment
Stable Prices
System and the Federal Open Market Committee
shall maintain long run growth of the monetary
and credit aggregates commensurate with the
economy's long run potential to increase
production, so as to promote effectively the
goals of:
Maximum Employment
Stable Prices
Moderate Long-Term Interest Rates
NOTE: Even though the FED was assigned three
goals, it has long been termed The Dual Mandate of:
Maximum Employment
Stable Prices
| The Dual Mandate Bullseye created by the Federal Reserve |
NOTE: Shown on the Bullseye above
and shown on the FRED graph to the left,
starting with the July, 2021, the "Natural
Rate of Unemployment (Long-Term)" name
has changed to the "Noncyclical Rate of
Unemployment".
Both of these terms represent the sum of
frictional and structural unemployment.
and shown on the FRED graph to the left,
starting with the July, 2021, the "Natural
Rate of Unemployment (Long-Term)" name
has changed to the "Noncyclical Rate of
Unemployment".
Both of these terms represent the sum of
frictional and structural unemployment.