The Fed can raise the reserve requirements. This is the amount the commercial banks are required to hold as cash deposit with the central bank. By increasing it, banks will have less amount to lend and therefore less amount of money will be in circulation. The banks can choose to raise interest rates as individuals and organizations will be competing to get the loans. The situation can worsen if the government decides to borrow locally from the commercial banks.
Considering the current situation in our nation the Fed should consider an expansionary monetary policy. The actions taken should aim to increase money supply and lower interest rates. This is to help businesses to recover from the covid-19 pandemic shock. This will stimulate economic recovery and ensure those who lost jobs during the pandemic are re-employed or absorbed somewhere else.
Considering the current situation in our nation the Fed should consider an expansionary monetary policy. The actions taken should aim to increase money supply and lower interest rates. This is to help businesses to recover from the covid-19 pandemic shock. This will stimulate economic recovery and ensure those who lost jobs during the pandemic are re-employed or absorbed somewhere else.
