An Empirical Examination of the Effectiveness of the Federal Reserve's Unconventional Monetary Policy Tools in Managing Unemployment and Inflation during Periods of Economic Uncertainty in the USA: A Sustainable Development Perspective

Abstract

The Federal Reserve implements multiple monetary policy instruments to control the U.S. economic conditions through the regulation of unemployment rates and inflation. The central bank continues to implement both conventional measures and unconventional policies to resolve current economic difficulties. We need to analyze whether the unconventional monetary policy tools used by the Federal Reserve have been successful in decreasing economic uncertainty especially regarding unemployment and inflation statistics. Research results show that Federal Open Market Committee (FOMC) in New York conducted unconventional policy actions which failed to deliver substantial monetary policy enhancements beyond the two-year mark of the financial crisis. The result demonstrates that expectations for policy modifications throughout the last six months did not translate into observable shifts in actual policy directions. Time elapses between monetary decision-making and market reaction and the economy displayed positive signs of trend-based recovery during this period. The repo rate exhibited most of its movements because of these elements during the mentioned period.