Here’s a breakdown of the president’s unemployment benefit plan.
What is the Federal Reserve Board?
The Board of Governors of the Federal Reserve System, also referred to as the Federal Reserve Board, manages the Fed. The board comprises seven members that are appointed by the president of the United States and confirmed by the Senate. The board is tasked with guiding Fed policy.
Congress has set three statutory goals for the Federal Reserve: maintain stable prices, maximize U.S. employment, and promote stable long-term interest rates. In addition, the Fed promotes sustainable economic growth, seeks to maintain the purchasing power of the U.S. dollar, and regulates the banking system. The Federal Reserve Board fulfills these policy goals through a variety of tools.
All board members serve on the Federal Open Market Committee (FOMC), the Fed body responsible for setting monetary policy. The chair of the Federal Reserve Board is considered to be the most powerful central banker on earth and one of the most powerful unelected officials of the U.S. government.
Term appointments and limits
Each governor’s term limit is 14 years, and the terms are staggered, with a term expiring every two years. This gives the board political independence and ensures one president cannot pack the board with members who favor his policies. Governors who serve a full term cannot be reappointed. However, governors who serve partial terms may be reappointed, meaning it is possible to serve on the board for more than 14 years.
The chair and the vice chair are also appointed by the president, and serve four-year terms. They can be reappointed at the pleasure of the president. Governors’ terms on the board are not affected by their status as chair or vice chair.
As of June 2017, the chair of the Federal Reserve Board is Janet L. Yellen, and the vice chair is Stanley Fischer. The three remaining members are Daniel K. Tarullo, Jerome H. Powell, and Lael Brainard. Three seats are presently vacant.
Federal Reserve Board example
The Federal Reserve Board implements the policy decisions arrived at by the FOMC. They manage the federal funds target rate by selling and purchasing government bonds, and modify the amount of reserves banks are required to maintain. The board also sets the federal discount rate.
When the Fed buys government securities from banks, this increases the amount of money banks have on hand to lend. When banks have more money to lend, interest rates are lowered and this can stimulate the economy. This is referred to as expansionary monetary policy.
When growth occurs too rapidly, this can result in increased inflation. To control inflation, the Fed sells government securities to banking institutions, which decreases the amount of money they have to lend. With less money on hand, interest rates rise and this slows economic growth and minimizes inflation.
Lock in today’s low interest rates before it’s too late.