The Summary of Commentary on Current Economic Conditions by Federal Reserve District, commonly known as the Beige Book, will be made public today, at 2:00 PM ET (18:00 GMT). The detailed and informative overview of the current US economic environment is expected by traders from all around the world. Today marks the 6th meeting of the Federal Open Market Committee (FOMC) this year, which will be followed by the last two on 24th October and 5th December.
The Beige Book – a fundamental analysis of the US economy
The Beige Book is a report published by the Federal Reserve District which contains information on current economic conditions, given by Banks and branch directors from each District, as well as interviews with key business contacts, economists, market experts, and other specialized sources.
The document summarizes all the gathered information by districts. It is published eight times a year by a designated Federal Reserve Bank on a rotating basis. Today will be the 6th meeting of the Federal Open Market Committee (FOMC) from 2018.
A Goldilocks economy might be indicated
The Beige Book is given to all members of the Federal Open Market Committee (FOMC) two weeks before each of the eight meetings. Since the summary contains information about employment, wages, all US industries and an overall description of the economic activity – the document influences the future decisions of the members.
Given the latest data releases regarding the unemployment rate, the Gross Domestic Product (GDP) and other economic factors; the Beige Book might report once again that everything is under control and therefore, implying the existence of a current Goldilocks economy. This type of economy happens when the country has the ideal growth rate (between 2-3%), as well as moderately rising prices.
On the other hand, if, for example, the Book indicates that inflation is high, then the FOMC will take measures by raising the interest rates and reducing the money supply.
The Beige Book has a pivotal value in Forex Trading
Because it gathers a notable amount of valuable information coming from powerful figures, the Beige Book is a treasure for traders; even if their current trades don’t involve the US currency. More than that, it can save a lot of time for those who are using the forex fundamental analysis instrument, as all aspects of the US economy will be covered in just one document.