Fed Plays Key Role
The recent global financial crisis has put the US Federal Reserve Bank in the spotlight. Its policies have global effects on markets including the Interbank Forex market. The Federal Reserve has played a key role in attempting to revive the economy during the worst recession in decades. Because of the close integration of major world economies the movements and policies of the Federal Reserve are watched closely by interbank Forex traders worldwide.
A Brief History
The Federal Reserve Bank was established in 1913 and is essentially the central bank of the United States. Its role is to monitor and establish a stable and responsive economy for the US. The Federal Reserve also helps to set fiscal and monetary policies and insures that the economy has adequate liquidity. The Federal Reserve affects all aspects of the economy including employment, growth rates, interest rates, money supply, and interbank Forex.
The G17 Report
The Federal Reserve is also charged with issuing the Industrial Production and Capacity Utilization report which is released on the fifteenth of each month by the Board of Governors of the Federal Reserve System. It presents the data on the output of the nation’s manufacturing, mining, and utility sectors. Also known as the G 17 report it organizes this data into industrial production and capacity utilization indices. This report
affects interbank Forex markets globally.
Stability of the Dollar
The Federal Reserve is also responsible for ensuring the stability of the US dollar. The policies of the Fed have ensured that the dollar remained strong during the near collapse of the financial sector of the US economy. The interbank Forex market has seen other currencies falter while the dollar has remained relatively stable.
Bailout Has Favorable Effect
The recent $700 billion dollar bailout, although unpopular, was passed due to the determination of the Federal Reserve Bank. The bailout has had a somewhat favorable effect on the banking sector and has stimulated credit markets. The actions of the Fed can be credited for keeping the dollar strong on interbank Forex markets globally.
