Research on the Two-way Influence of US Monetary Policy Since the COVID-19 Pandemic

Abstract

Based on the novel coronavirus outbreak, the global economy has been strongly impacted, resulting in a worldwide economic recession. This paper mainly studies the orientation and target changes of the US monetary policy, adopts the method of dialectical analysis and data empirical analysis to study the two-way influence of the Fed monetary stance, and shows that implementation of monetary policy has an obvious two-way influence on the economy, that is, monetary policy will inevitably cause the imbalance between inflation and unemployment rate. Expansionary monetary policy can reduce unemployment and stimulate the economy meanwhile, it will lead to the accumulation of inflation. The tightening of monetary policy will lead to unemployment and economic recession while easing inflation. Excessive accumulation of negative consequences of monetary policy will result in a deeper economic crisis, which will become the main factor affecting the change of monetary policy direction. This shows that the monetary stance orientation of the Federal Reserve is based on the balance of advantages and disadvantages of its two-way effects, and the timely change of monetary policy orientation is the key to mitigating the negative effects caused by monetary policy.