What is MacroWeb?

Expansionary Monetary Policy
January 1, 2001- November 6, 2001

The information in this essay is a snapshot of the expansionary monetary policy from January 1, 2001 to November 6, 2001. Since this is current policy it is impossible to know future statistics as to how long this policy will last. It was necessary to cut the time line off, so I chose November 6, 2001 because it was the date of the last Fed rate decrease. The Federal Reserve has, however, hinted at dropping the Fed funds rate another quarter point in December if necessary. This remains to be seen.

This expansionary monetary policy has lasted 11 months so far. The Fed Funds rate targets have changed 10 times; 8 times by a half point and 2 times by a quarter point. The discount rate has changed 11 times; 7 times by a half point and 4 times by a quarter point. During this period, the Federal Reserve has not made any significant internal structural or personnel changes. Previous to and partially into the current monetary policy, the U.S. found itself in the longest expansion in its history. This expansion started in March 1991 and lasted until March 2001. During that time unemployment rates had been dropping fairly steadily. Unemployment has now had its highest jump in 21 years October 2001. The chart below gives the economic information from the start of the snapshot period until the end of it.

  1st Quarter 2001 3rd Quarter 2001
GDP Growth 1.30% -0.04%
Inflation Rate 4.00% -0.30%
Unemployment Rate 3.90% 5.40%
Fed Funds Rate 6.00% 2.00%
Discount Rate 5.75% 1.50%


Who is

Dave Tufte?

Copyright, Russ Stewart, 2001.