Monetary Policy
The policy of the federal reserve bank affects The Home Depot through a variety of ways. These policies are known as monetary policy which can be defined as “A set of tools that a nation’s central bank has available to promote sustainable economic growth by controlling the overall supply of money that is available to the nation’s banks, its consumers, and its businesses. (Investopedia)”. These monetary policies affect The Home Depot in a variety of ways, one of these being the federal interest rate, this rate set forth by the federal reserve can play a part in determining the state of the stock market, when the federal reserve decreases rates, the stock market will usually go up, while the market will suffer when interest rates increase. Even in the short time since January 2022, the interest rate has increased from 0.08% to 3.25% in July of 2022 (Statista). This coupled with inflation issues which have plagued the U.S since the pandemic THD has experienced a stock decline of 415.01 in December 2021 to a level of 269.14 on September 21st 2021. These policies set forth by the Fed have affected The Home Depot greatly in the same way many other companies have suffered since the pandemic.
Fiscal Policy
The Fiscal policies of the United States, Mexico, and Canada affect the Home Depot in a variety of ways, the U.S has continued to suffer from the effects of COVID-19 because of policies such as the stimulus packages, although The Home Depot has seen increased revenue and profitability throughout the pandemic, The United States as a whole has suffered the effects of policies such as this through increased inflation and federal reserve interest rates, as mentioned earlier. Mexico is one of The Home Depot’s key markets who’s fiscal policies greatly affect The Home Depot’s profitability in the country. Mexico seems to focus on the stability of GDP and minimizing debt, The Home Depot will benefit from these policies because of the continued rising budget in Mexico as seen in their 2023 budget (Mexico Budget), this higher budget will directly affect The Home Depot’s profitability and growth.
References
Mexico Budget GDP Assumptions Optimistic, Revenue Forecasts More Prudent. (2022, February 16). FITCH WIRE. Retrieved October 2, 2022, from https://www.fitchratings.com/research/sovereigns/mexico-budget-gdp-assumptions-optimistic-revenue-forecasts-more-prudent-16-09-2022
Inflation rate and Federal Reserve interest rate monthly in the United States from January 2018 to July 2022 [Graph]. In Statista. Retrieved October 2, 2022, from https://www-statista-com.ezproxy.regent.edu/statistics/1312060/us-inflation-rate-federal-reserve-interest-rate-monthly/
Hey,
I enjoyed reading your post. Yor explanation of the Federal Reserve bank and its policies is good to understand. You also mentioned that the Home Depot did not struggle as much during the Covid pandemic, which makes sense because more people were at home trying to change their living spaces and order many things online.
It is great that Mexico is working hard on stabilizing their GDP and minimizing debt. When the budget increases the growth of Home Depot in Mexico will also increase.
Have a great weekend:)