PART A
Question 1
The Federal Reserve has made the following decisions to implement the monetary
policy stance announced by the Federal Open Market Committee in its statement on
May 4, 2022:
” The Board of Governors of the Federal Reserve System voted unanimously to raise
the interest rate paid on reserve balances to 0.9 percent, effective May 5, 2022.”
Critically discuss the main reasons why the Federal Reserve is taking this decision to
increase the interest rate.
Sample Solution