With the economy in the news every day, more attention is being focused on the Federal Reserve than ever before.

The Federal Reserve is made up of twelve Federal Reserve Banks, overseen by the Board of Governors.  The Board of Governors is located in Washington, DC and is comprised of just seven members, who are appointed by the President and confirmed by the Senate.

The main responsibilities of the Fed include:

• Researching US national and regional economies
• Providing financial services to depository institutions, the US government, and foreign official institutions
• Supervising and regulating banking institutions to ensure the safety of the nation’s financial system and protect the credit rights of consumers
• Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable  prices, and moderate long-term interest rates
• Communicating information about the economy via publications, speeches, seminars and websites; including the statement given by the Federal Chairman, following the eight formal meetings that take place about every six weeks throughout the year.  At these meetings, the Fed has the opportunity to make changes to the Federal Funds Rate, and make their decision by reviewing economic and financial conditions.  They can also make adjustments to the Fed Funds Rate outside of these meetings.

Overall, the Fed’s main responsibility is to keep the economy growing at a steady pace by keeping inflation stable and rates moderate.  When inflation is low and stable, businesses and households can spend, knowing that their purchasing power can remain strong.

Interest rates…everybody wants to know where they are headed. Here’s what’s coming out this week that will definitely have an impact.

The Fed’s Beige Book – officially known as the Survey on Current Economic Conditions will be reported on Wednesday. It shows info from banks, interviews with business contacts, economists, market experts, and other sources. The Beige Book is thought by some to be looking in the rearview mirror too much, but it can serve as a future indicator of the Fed’s policy decisions.

This Thursday, the Initial Jobless Claims report will be released. Last week, the number filing for jobless benefits fell, even though it was still higher then previous estimates. Markets will be watching to see if this report hits expectations of approximately 556,000 new claims.

Also on Thursday, the Balance of Trade for July will be reported. The expectations are that the trade deficit will come in the same as the previous month when it widened to $27 Billion. A negative balance of trade (deficit) occurs when imports surpass exports. The United States trade balance has been in a deficit since the mid 1970’s.

Lastly, on Friday, the Preliminary Consumer Sentiment Index will come out. This is a survey conducted by the University of Michigan and measures consumer attitudes regarding the present and future economic conditions.

The biggest factor this week is treasury auctions as the release and sale of Government Bonds can affect Mortgage Bonds, which can alter our interest rates. It’s good to keep your eye on Treasuries and stocks this week as an excellent indicator of what rates will do.

As always, many thanks to Paul Soule, a Senior Mortgage Advisor with Coldwell Banker Home Loans.