A Study Of The Impact Of American Interest Rate Policy On Fluctuation Of Economic Cycle

Under current economic environment of financial crisis erupted more frequently,most governments and central bank take stabling economy, reducing economic fluctuationas primary policy goal. Interest rate has become one of the main means of monetary policyas an important lever of capital supply and demand because it performances more directand flexible. Especially since World War II, Keynesian theory became mainstream schoolof Economics in Western countries, most governments adopted it as policy formulationbasis, using interest rate as primary means to effect economy. The history of using interestrate to control economy development for America has been a long time, throughout itsprocess, it is not difficult to see that U.S. Federal Reserve Board adopted interest rate asintermediate target in most time.As the world’s largest economy, the economic situation of the U.S. effects the globaleconomy directly, what’s more, the interest rate policy of Federal Reserve Board has adirect impact on the U.S. economy, so it is particularly necessary and important to analysisthe effect of Federal Reserve Board using interest rate to control the U.S. economy in along-term. Not only can understand the reaction of economic fluctuation to differentinterest rate level, but also can give reference to other countries. Especially in China whereinterest rate has been in the marketing process, how to use interest rate more appropriatelyand master the right intensity and time to avoid interest rate fluctuation has an impact oneconomic fluctuation has a important practical significance.This paper proposed to study this issue by theoretical and empirical analysis. Theconclude is that U.S. interest rate policy depended discretionary rules advocated byKeynesian for a long-term, making the interest rates fluctuations frequently as well as theeconomic cycle. So Governments should adjust the policy according to national conditionsand keep the interest rates within an acceptable range to minimize the negative impact.