The Federal Open Market Committee (FOMC) dual mandate consists of two aspects. The first aspect is the provision of maximum employment. The provision of maximum employment at FOMC focuses on the level of cyclical unemployment. Cyclical unemployment is the kind of unemployment that increases when the economy of the United States declines. According to the September FOMC meeting, the American economy is performing at a sustainable rate that is capable of potentially reducing the unemployment rate in the country. With the reduction of cyclical unemployment, the Federal Reserve Bank will have stabilized the employment in the USA and thus increasing the job security for people working in the country.
The other aspect of the dual mandate is price stability. In price stability, the Federal Reserve Bank seeks to stabilize the prices for goods and services to shield the country from economic suffering when there is a reduction in the monetary circulation in its economy. The Federal Reserve Bank also ensures that the purchasing power of the currency is maintained. The FOMC has also been tasked with the controlling of the rate of inflation to contribute to price stability. The September FOMC meeting highlighted the role of the Federal Reserve Bank as being responsible for the influence of the supply of money, which affects the interest rates in the company. The economy of the United States of America is performing at par with the mandate.
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One of the economic indicators that the FOMC makes use of to decide on the monetary policy in the United States of America is money supply. The Federal Reserve Bank makes use of the money supply as an economic indicator to predict the cyclical economic regressions and the consequent effects such as the rise in the cyclical unemployment that could come after there is a financial downturn in the USA.
The other economic indicator is the real gross domestic product (GDP). The real GDP as an economic indicator comes from the data released quarterly by the U.S. Department of commerce's bureau of economic analysis. The GDP of the USA has been increasing every year as the financial performance of the country becomes better.
The third economic indicator used by the FOMC September meeting was the consumer price index (CPI). The CPI takes a sample of many goods and services that are offered in over two hundred item categories. In the USA, the data is collected through phone calls and personal visits to the target respondents of the data collection. With the stabilization of the American economy over the years, the CPI has risen and is forecasted to grow even higher in the coming years.
One of the recommendations is to raise the interest rates slightly in the country to provide more money into the economy. The increase in the Federal Reserve Bank's momentary growth increases its power to control the growth of the American economy. The bank does so by having a Federal Reserve Bank funds rate, which is one of the essential interest rates on the planet. The increase in the financial power for the federal reserve banks is therefore vital to the rise in the growth of the American economy between September and either November or December 2018.
The other recommendation is to intensify the open market operations to contribute to the financial effort of the commercial banks in the United States of America towards the interest Rates that the Federal Reserve Bank has decided for them. The open market operations are standardized and compel the commercial banks to be at par with the Federal Reserve Bank, and therefore there is an economic advancement. The increase in the open market operations will also increase the short-term economic interest rates in the USA, which will benefit the company's economy come November or December 2018.
