ill decrease the demand by banks to borrow from the Fed. This leads to the reduction in the money supply. If the money supply within banks is reduced, then banks will raise their interest rates, which will discourage the non-bank public from borrowing, and encourage them to save. This in turn will reduce consumer spending. Inflation is at a very low point, and many economists, such as Alan Greenspan, are doubtful that it will get any lower. However, additional rate hikes might prevent the excessive overheating that many economists fear. The Federal Reserve Board made the decision to tighten monetary policy on November 16, 1999. The federal funds rate was raised 25 base points to 5.5%. The discount rate was raised 25 base points from 4.75% to 5%.Works Cited"Trapped by the Bubble” The Economist 25 Sept. 1999: 17 – 18.Boldin, Michael. “Foreseeing Rate Hikes in the Futures Market” www.dismal.comBoldin, Michael. “What Will the Fed Do Next?” www.dismal.comGlassman, James K., Kevin A. Hasset "Dow 36000" The Atlantic Monthly Sept 1999: 37-58.Kohn, Donald L. Secretary of the FOMC “Minutes of the Federal Open Market Committee” www.dismal.com/fed/minutes/fomc_minutes082499.stmSchlesinger, Jacob M. “Fed Holds Rates Steady but Chills Market.” Wall Street Journal 6 Oct. 1999, A2Schlesinger, Jacob M. "Stock Surge Could Trigger Fed Move.” Wall Street Journal 8 Oct. 1999, A2.Schlesinger, Jacob M. and Sarah Lueck “Fed Raises Rates by One-Quarter Point.” Wall Street Journal 17 Nov. 1999, A2Testimony of Alan Greenspan; July 22, 1999; http://woodrow.mpls.frb.fed.us/info/policy/mpo/mp9997.htmlJuly 1999 Humphrey-Hawkins Report: Report Section 1: Monetary Policy and the Economic Outlook http://www.bog.frb.fed.us/boarddocs/HH/1999/July/Reportsection1.htmEconomy At a Glance; Bureau of Labor Statistics; http://stats.bls.gov/eag.table.html...
