Strategic Initiatives of Federal Reserve - Essay Example

While the slowdown in the emerging market like China has worried investors in the west, the yields on bonds maturing in five years or less have seen a sharp rise due to indication of short-term interest rates. At the same time, good news for long-term investors is that 10-year yield has consistently traded above 2% since last May and all types of bonds have shown increased yields by the last quarter of 2013. The article ‘Situation analysis: Preparing for Fed’s next move’ is pertinent in its observation that strategic initiatives of Federal Reserve during the financial crisis that had called for drastic measures now need to be tempered with fresh inputs.

It was primarily created to avert the banking crisis by providing financial and policy-related stimulus to the US economy. Its recent move to a gradual transition from aggressive policies especially regarding Treasury bond is important to step towards neutral stance. The quantitative easing relies on the productive deployment of cash into economic growth processes like capital investment through low-interest rates and available liquidity. It brightens the prospect of sustainable and healthy growth of the economy that would ultimately encourage greater employment opportunities.