Demystifying Fed’s Monetary Policy – Investment Banking

Investment Banking – Demystifying Fed’s Monetary Policy

Understanding how a Central Bank’s Monetary Policy is determined and implemented is crucial for trading financial markets. The same principles you learn here can be applied to any country’s monetary policy.

Financial and economic analysts are constantly trying to predict the Federal Reserve Bank’s next move. In order to understand the Federal Reserve Bank’s Monetary Policy we build on multiple relationships, between – banking assets, liabilities; the fund market; money measures and multipliers; Federal Reserve Bank’s objectives and tools; financial markets and more.

Understanding how the Fed determines and implements its monetary policy is not a simple task since it requires an understanding of multiple aspects of the financial and monetary system. In this course we build these relationships right from the basics.

In order to understand basic fundamentals to form relationships between money, reserves and policy goals we study –

• Banking fundamentals – fractional reserve banking, banking reserves, ROE
• The market for the supply and demand of funds (The Financial Account of the US)
• Monetary measures
• Cash, money and reserve multipliers
• Monetary impact on interest rates, exchange rates
• The functioning of the Federal Reserve Bank
• Relationship between the US Treasury and the Federal Reserve Bank
• Monetary policy implementation tools -OMOs, Reserve ratios, Discount Window etc,
• The Fed Funds Market, Fed Funds Rate, Discount Rate
• The steps taken by the Fed to implement the monetary policy

and much more…

Take the free previews lessons and hope to see you soon.

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