U.S Monetary Policy in 1995
When Alan Greenspan presented the Federal Reserve's semi-annual report
on monetary policy to the Subcommittee on Domestic and International Monetary
Policy, the Committee on Banking and Financial Services, and the U.S. House of
Representatives on February, Dr. Greenspan touted a cautionary yet favorable
view of the U.S. economy. He states that "With inflationary pressures
apparently receding, the previous degree of restraint in monetary policy was no
longer deemed necessary, and the FOMC consequently implemented a small reduction
in reserve market pressures last July." (Greenspan, 1996, Speech)
During the Summer and Fall of 1995, the economy experienced a
strengthening of aggregate demand growth. According to Greenspan, this increase
in aggregate demand brought finished goods inventories and sales into near
equilibrium. The Fed's fine tuning of the economy seemed to be paying off.
Greenspan had a positive outlook for the economy......
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