By: Cleo Washington, Intern
Whether we agreed or disagreed with their decisions or not, principals are vital to school operations. From creating class schedules to overseeing student behavior, principals are essential to keeping schools running smoothly. Similarly, a system known as the Federal Reserve keeps our nation’s economy on track.
The Federal Reserve System is America’s central bank, an institution that manages a country’s monetary policy and has three entities:
The Board of Governors, Twelve Federal Reserve Banks, and the Federal Open Market Committee (FOMC), which decides whether to raise, cut, or maintain the federal funds rate, influencing interest rates across the economy.
The actions of the FOMC are currently controversial. In its first four meetings this year, the Fed held the federal funds rate steady, at a range of 4.25% to 4.50%. The Fed is expected to maintain rates at its upcoming July meeting; however, it is likely to reduce the funds rate this fall.
The Federal Reserve approaches decisions with a “dual mandate” in mind: stable prices and maximum employment. The rationale of Fed Chairman Jerome Powell in sustaining rates is due to uncertainty surrounding tariff policy, fearing a reduction in rates would lead to increased inflation. President Trump has demanded that Powell lower rates, arguing that a reduction is necessary to spur economic growth (by making borrowing cheaper) and offset any drag from his tariffs.
The Federal Reserve does not factor political pressure into its decisions, and you should not be distracted by the noise either. Sonja Parker, a Financial Advisor and Strategic Planner at Edward Jones, notes that “no matter the administration, it is important to have quality and diversification in our investments.”
Maintaining these investments over time allows for compound interest to take effect, allowing you to amass wealth. Principals make decisions that are in the best long-term interest of students, ignoring pushback. Despite the chaos, trust in the Federal Reserve to do the same.
Author: cleowash
