Recent Direction of Monetary Policy in a Country of Your Choice Essay

Recent Direction of Monetary Policy in a Country of Your Choice - Essay Example Presently, the Reserve Bank executes the functions of the monetary policies in the USA for the purpose of controlling significant issues such as inflation, unemployment, and investment trends among others (Mankiw, 1997). Notably, there lie several purposes of the monetary policies that have been transformed periodically. The various guidelines of the government of a particular country possessed a noteworthy role in the economy in which the central bank acts for the purpose of executing the monetary or fiscal policies to a large extent. The chief motives of executing the monetary policies are to enhance the progression as well as the advancement of a country, decreasing the rate of unemployment and maintaining stable prices of different commodities (Reserve Bank of New Zealand, 2007). Monetary or fiscal policies are often related with certain important factors including the facilities of credit and the rate of interests among others. It can be stated that the monetary guiding principl es establish a kind of interrelation amid the rate of the interest charges which indicates toward the price or charge at which money can be borrowed and also toward the overall money supply in an economy (Taylor, 2001). In this paper, a brief idea regarding the conception of monetary policy along with its recent direction prevailing in an economy is taken into concern. In this regards, this paper will focus on presenting a brief overview of monetary policies prevailing in USA specifying its recent direction. A Brief Overview of Monetary Policies in USA Monetary policy of any nation is defined as the management of money supply and interest charges that are executed by the central banks of various countries to control the rising commodity prices as well as to diminish the rate of unemployment to a certain extent. From an in-depth point of view, it can be inferred that the monetary policies have a considerable impact upon the demand in an economy which in turn tend to affect the rate o f interest charges (Patnaik, 2007). It is in this context that the substantial increase in the rate of interests makes the finance lending abilities of an individual more costly where the organizations as well as the firms hold fewer inventories. Moreover, a rise in the interest charges also influences the investment initiatives of an individual as well as of any industry participant to be more costly. Subsequently, the assets tend to lose its real value (Floyd, 2010). Furthermore, in relation to the financial reforms considered in the USA, the role and the importance of the monetary policies have posed greater attention as a major economic growth driver. Notably, the adequate functioning of the monetary policies is to sustain a stable and low inflation rate in the economy. The significances as well as the purposes of the monetary policies have increasingly become the prime importance of the policy makers in the USA for the purpose of introducing certain policies that would support to maintain a stable and low inflation rate (Friedman, 1968). The broad aims or targets of the monetary policies are to attain rapid rate of financial progression and advancement of the economy, making sure to preserve the stability of price into the economy. It also aims at generating more employment prospects and promoting distributive integrity towards the economy (Rangarajan, 1997). The issue of stability of prices, a low and a steady price situation among others are also fundamentally regarded as a necessary element for the purpose of enhancing as well as raising the productivity and growth of an economy (Rangarajan, 1997). Moreover, the other purposes of the monetary policies include stabilizing the rate of inter