Summary of the Federal Reserve's history and policy procedures

ƒÜ The Early Years: Discount as Primary Tool Changing the discount rate was the primary tool of monetary policy when the Fed was created and the Fed had not yet discovered the power of open market influencing money supply. Before WWI, the Fed had taken a passive role the utilized policy following the "real bills doctrine". However, by the end of WWI, Fed's passive policy had led to a raging inflation. As a result, …showed first 75 words of 832 total…

…showed last 75 words of 832 total…using a federal funds target in the early 1990s. From 1992 to 1994, the Fed kept the federal funds rate at a constant low level. And when the economy had returned to rapid growth in 1994, the Fed began to raise the federal funds rate in order to head off and future inflationary pressure, but with a new policy procedure. Instead of keeping the federal fund rate target secret, the Fed now announced any federal funds target change.