Fed's Bullard: Weak Inflation May Argue For More Fed Stimulus - Assignment Example

Louis named James Bullard revealed that the outlook of different monetary policies is incessantly enhancing the turbulent financial scenario along with mitigating the challenges resulting from inflationary pressures by a greater level. Moreover, Bullard proclaimed that the enhancement in the financial landscape might assist in slowing down the tempo of buying bonds at large (Derby, “Fed's Bullard: Weak Inflation May Argue for More Fed Stimulus”). Relating to the article, Bullard affirmed that though the conditions of the labor market have enhanced, the Federal Open Market Committee (FOMC) can slow down the pace of purchasing bonds.

But, the rise of the crucial aspect concerning weak inflation might reveal that FOMC would have to raise its tempo in buying bonds (Derby, “Fed's Bullard: Weak Inflation May Argue for More Fed Stimulus”). This can be justified with reference to the other article i.e. “Fed head says low inflation may warrant prolonging bond-buying program” which presented by Steve Matthews and Greg Quinn that the vital concern of weak inflation below 2 percent target of the Central Bank may raise the extensive usage of bond buying for the purpose of developing financial position and most significantly lessening the rate of unemployment.

It has been apparently observed in this particular article that the FOMC will continue to purchase bonds until the conditions of the labor market are enhanced considerably. In response, Bullard proclaimed that this major decision of FOMC can be related to an important concern. In this regard, the significant concern has been viewed to be the consideration of low-interest charges that can be linked with extreme risk-taking especially in the financial business markets by FOMC (Matthews and Quinn, “Fed head says low inflation may warrant prolonging bond-buying program”).

According to the article “Fed Stimulus Stays Strong” which presented by Joseph Cafariello, it can be viewed that FOMC tends or promises to buy extra agency based mortgage-backed securities at $40 billion and also long-term based Treasury securities at $45 billion on a monthly basis with the motive of attaining certain additional benefits. These benefits comprise preserving downward pressure resulting from the imposition of interest charges that are long-term, assisting mortgage markets, and most vitally making wider financial circumstances much more accommodative among others.

Furthermore, Cafariello argued in the article that the committee is quite prepared to raise or lessen its purchase of bonds or securities by taking into concern the prevailing conditions of the labor market. Similarly, it has been viewed in the article that like FOMC, the FED is also keeping itself much open towards raising or lessening the purchase of bonds or securities as financial conditions necessitate. As mentioned in the article, both FOMC and the FED is much concerned about increasing or lessening their respective pace of buying bonds or securities owing to the reason that different fiscal policies are restraining financial growth by a greater level and most vitally weakening the economy at large (Cafariello, “Fed Stimulus Stays Strong”).