In 2013 and 2014 we are seeing a steady increase in the housing market as it starts to level out to normal levels after this Great Recession. There are many factors that can affect the economy and mortgage rates in our local areas. Some of these causes are the buyer, the investor, and the Federal Open Market Committee (FOMC) decisions on the federal fund rate. By changing the rate the FOMC can alter the way the economy will run. They can speed it up, slow it down and balance the economy by buying and selling bonds. The FOMC plays an important role on interest rates and how it can affect our mortgages, loan opportunities, property tax and employment possibilities.
The Federal Open Market Committee (FOMC) is a board of members twelve members that serve a year term. They are responsible for meeting eight times a year and they will review economic and financial conditions and assessing the long term risk of policy action that they put into place. They are responsible for controlling the supply of money in the economy,and they must adjust interest rates to promote economic growth and stability within the economy. In simple terms, the FOMC determines the appropriate actions for monetary policy. This is how the FOMC influences the economy and the citizens being affected by it. For example, if the FOMC lowers the rate the economy will grow quickly and may cause inflation, but if the FOMC rises the rate money becomes more valuable which can slow the economy down and in turn affect businesses. By increasing the rate it also lowers inflation. As one can see it has to be careful balance of both actions in order to keep the economy balanced.
When looking at the United State Census for Residential Sales, I compared the sales of residential ...
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...tely effects the selling price of a home or the mortgage someone will receive. The FOMC has create direct and indirect ways to positively effect the economy to try and bring balance back to our system.
Works Cited
Isidore, Chris. "Housing to (finally) Be Driver of Economic Growth in '13." CNNMoney. Cable News Network, 27 Jan. 2013. Web. 09 Mar. 2014.
"New Residential Sales." New Residential Sales. United State Census, n.d. Web. 09 Mar. 2014.
United States of America. Federal Open Market Committee. Board of Governors of the Federal Reserve System. Minutes of the Federal Open Market Committee April 30–May 1, 2013. Washington D.C.: n.p., 2013. Print.
Wardrip, Keith, Laura Williams, and Suzanne Hague. He Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development. Digital image. Center of Housing Policy, Jan. 2011. Web. 9 Mar. 2014.
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economic stability and growth and is primarily achieved by the targeting of various interest rates. Monetary policy may be either contractionary or expansionary whereby a contractionary policy reduces the money supply, reduces the rate at which money is supplied or sets about an increase in interest rates. Expansionary policies on the other hand increase the supply of money or lower the interest rates. Interest rates may also be referred to as tight if their aim is to reduce inflation; neutral, if