Interest Rate Forecasting -- "What the Federal Reserve Watches" by C. M. Corky Watts, Webmaster The Mortgage Mart The Federal Reserve is the central bank of the United States. It is an independent agency of the Federal government, but key positions are appointed by the President and confirmed by Congress. The Federal Reserve is composed of twelve regional banks and has a board of governors that oversees its activities. The central bank provides liquidity to reserve member banks, regulates bank holding companies and monitors growth of the U.S. money supply. Over the years, the Feds have become the gate keeper of domestic economic growth mortgage debt to income ratio florida debt consolidation loan and the rate of inflation. The Federal Reserve uses two methods to maintain modest economic growth with low inflation. First, they implement a monetary policy that assures a steady but modest growth of money. Second, they establish the borrowing rate on two key financial instruments -- the Federal Funds Rate, the borrowing rate on loans between commercial banks and the Federal Reserve Discount Rate, the rate of interest on funds borrowed by commercial banks from the Federal Reserve. Both key rates help to control the growth of money. In the past several years, the Federal Reserve has been successful in maintaining modest economic america first credit union florida debt consolidation loan growth, high employment and low inflation through its monetary policy. The central bank has a committee called the Federal Open Market Committee (FOMC) that meets periodically during the year (typically every five to eight weeks) to set the two key interest rates and establish its monetary policy. The FOMC is comprised of the seven members of the Board of Governors and five Reserve Bank Presidents. The committee reviews the preceding months' economic data for clues on the future and present health of the economy. The committee will act preemptively after reviewing the economic data. If they believe the economy is growing above their florida debt consolidation loan florida debt consolidation loan target range and creating inflation pressures, the committee may elect to raise interest rates to slow economic growth. Conversely, if they believe the economy is heading into a recession, they may lower rates to stimulate economic growth. Any time inflation is growing faster than their target rate, they will most likely raise interest rates. Their other primary monetary policy tool is buying U.S securities that add reserves to the commercial banking systems or selling U.S. securities that withdraw reserves from the banking system. Investors, lenders and borrowers through out the world keep a watchful eye on the Federal Reserve's policy. As economic indicators debt consolidation - free quote florida debt consolidation loan are released by