Questions tagged [fed-funds-rate]
The fed-funds-rate tag has no usage guidance.
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Taylor Rule Model Specification: Serial Correlation and Interest Rate Smoothing
I'm reading this paper by Abrams and Iossifov. The paper investigates electoral cycles influence on monetary policy by estimating a Taylor Rule reaction function using OLS. The authors describe the ...
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When Cathie Wood says the Powell has 20x rates vs Volker 2x rates in 1981, is this the right way to look at it?
Cathie Wood regularly says the FED today gone too far with rate rises, saying they have raised rates 20 times from their 0.25% lows in 2020, where as in the early 1980 Volcker only doubled rates from ...
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impact of a gradual adjustment of the federal funds rate
Although the Federal Reserve has been raising interest rates for about 1 year, and inflation has slowed down, prices are not going down much. What are the benefits of raising rates slowly? Obviously ...
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Why does decrease in Feds fund rate lead to decrease in core PCE inflation rate?
According to the Fed's own forecasts inflation should reach 2% (as vowed) shortly after 2025 under normal circumstances from the below chart.
I know that generally as Federal funds rate increases, ...
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Do U.S. Fed Interest Rate hikes and bond yields have a causal effect on each other?
I understand that there is a strong causal effect between U.S. Fed rate hikes or decreases on U.S. bond yields.
But does the relationship also go the other way, e.g. U.S. Fed hikes/decreases in ...
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Are there still (2022) bank reserve requirements, and if not, how do open market operations now work with the target rate?
With several recent increases in the (U.S.) Federal Reserve's target rate, and accompanying news releases, I was refreshing my knowledge on how those changes actually operate. In the course of doing ...
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What is the effect on shelter prices of raising interest rates?
In the UK, a rise in rates causes a rise in mortgage repayments. It can lead to landlords raising rents due to margin pressure, if their mortgage is not fixed or is close to the end of its fixed ...
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Why doesn't conventional monetary policy involve long-term interest rate targets?
Another way to phrase my question: why doesn't conventional monetary policy include manipulation of long-term interest rates?
This question might sound "weird" at first glance, but please ...
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What were the benefits of creating ON RRP (versus expanding the availability of IOR)?
I'm not understanding why the Fed decided to introduce their Overnight Reverse Repo Facility (ON RRP).
From the St. Louis Fed, it helps to provide a floor for the Federal Funds Rate (FFR), a market-...
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How does the Fed ensure the realised overnight interbank lending right stays within the Fed Funds Rate band?
I am trying to understand how the target FFR set by the FOMC is actually realised in the overnight lending market. That is, by what mechanism does the market driven overnight lending rate converge to ...
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Inflation vs fed hike
If inflation continues to grow at the pace at which it’s growing won’t the inflation itself put the economy in slowdown. Why does FED have to proactively intervene to slowdown?
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Why do reserves increase when the Fed buys bonds? (Introduction to Macroeconomics)
A question asks, "If the federal funds rate were above the rate the Fed had targeted, the fed could move the rate back towards its target by _" and then the options are buying/selling bonds, ...
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Are low rates a subsidy to banks?
Axel Leijonhfvud (Professor Emeritus, Department of Economics, UCLA) wrote in 2011:
The Fed is supplying the banks with reserves at a near-zero rate. Not much results in bank lending to business, but ...
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Are major banks in US necessarily going to benefit from the rise of federal fund rates?
https://wtvbam.com/2022/01/05/fed-funds-futures-see-rate-hike-in-march-after-minutes-of-policy-meeting/
It is believed that Fed is very likely to raise the Federal Fund rates in the next a couple of ...
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Does FED's change in short-interest rates impact long term rates?
Through changing the federal fund rate(short-term), does this empirically impact the longer end of the curve? If so, what is the logic or transmission mechanism that caused the change?
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Credit risk of interest rate on excess reserves vs fed funds rate?
I noticed that the interest rate on excess reserves and the fed funds rate are almost exactly the same at all times. Why is this the case? Shouldn't the credit risk of a bank be higher than the ...
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Why is the prime rate typically 3% higher than the fed funds rate?
What is the right framework to think about the prime rate in relation to the fed funds rate?
Idea 1: A bank is safer to lend to than even trustworthy institutions so there's a premium on prime rates. ...
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