Summary of Testimony
The monetary policy report begins discussing the first half of 1996. The review stated that the first half had been went better than it was expected to go. In addition, the review stated that GDP went up by 2 ÃÂ¼ and that industrial production rose by 5 1/2., and that manufacturers were running above postwar averages. Also, a topic that was discussed in the beginning and in most of the report was inflation. In report affirmed that inflation had been inactive. Overall in the first half of 1996, things looked good for the economy. A few other factors that assisted the growing economy are low interest rates, banks were eagerly looking to lend money, and the stock market was rising. The economy was booming, and Greenspan stated that the economy would eventually establish to a sustainable pace in the latter part of the year.
Though the economy was in a good position, the report stated that the economy would slow down a little and become more stable.
The following are a few reasons why the economy may take a downshift. The bond market turned toward restraint. The economy was doing better than anticipated and intermediate and long-term interest rates had risen. Also, the dollar on foreign exchange markets went up. This meant that the U.S had been doing better than the other countries that it trades with. This could be bad because it could decrease exports. Also, consumers had been spending a great deal of money in the time of the boosting economy and had gained a large amount of debt. This would slow down consumer spending and slow the economy down in the upcoming months.
The report goes on and discusses the recent behavior of inflation. The report said that strong forces have been developed to...