7-2 Final Project Milestone Three.doc FIN - 620 7-2 Final Project Milestone Three: Analysis of the Scenario Southern New Hampshire University FIN - 620 Analysis of the Scenario The Federal Reserve increased the fed
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7-2 Final Project Milestone Three.doc FIN - 620 7-2 Final Project Milestone Three: Analysis of the Scenario Southern New Hampshire University FIN - 620 Analysis of the Scenario The Federal Reserve increased the federal funds rate as the economy outlooked had continuously improved. The Federal Reserve will help boost the economy by slowly increasing the federal fund rate. Increasing the federal fund rate will help increase the labor markets and maintain the rate of inflation. Impacts on Capital Market Conditions The Federal Reserve uses the Contractionary Monetary Policy to slow spending by reducing the money supply and increasing the federal fund rate. The contractionary monetary policy is utilized to reduce demand when there is a risk that inflation could increase by selling government securities and raising the reserve requirement for banks. Everyone is affected when the Federal Reserve changes the federal fund rate. With the increase in the borrowing money rate between banks increases, the increase is passed on to the consumer and business looking to borrow from the bank via a higher interest rate on mortgages, auto loans, and any loan. With increased rates, consumers and businesses will reduce spending, and the reduced spending will have a negative effect on capital markets. Impacts on the Firm The impact on J.P.Morgan Chase from increasing the federal fund rate could impact how J.P.Morgan Chase meets its company objectives and its direction. "We know that when communities do well, our company does . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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