Questions tagged [federal-reserve]
Use only for questions that are directly related to the central bank of the United States, the "Fed". For example, US monetary policy, US money supply, US balance sheet, etc. Do not use for generic questions related to central banks, monetary policy or other, which are not directly related to the Fed. Use instead central-banking, monetary-policy, or related tags.
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What process does a new bank go through to get its first central bank reserves?
Im trying to better understand how banks work and one of the first thing that confuses me is central bank reserves.
Current understanding of central bank reserves:
Central bank reserves never enter ...
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Fed Balance Sheet : flow of funds 2023-04-26
Fed Balance Sheet Changes
Here's a chart of the Fed Balance Sheet changes for 2023-04-26:
Flow of funds
Here's some guesses as to how the funds flowed between items:
...
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How to explain negative correlation betwen FED funds rate and dollar volatility?
actually I am looking into monthly price data on bitcoin and the us-dollar (USD/EUR) and the monthly federal funds rate.
I calculated the volatility by:
...
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Are bailouts destabilizing the global economy?
I saw this posited in this WSJ opinion piece here
Notes on the Fed
In 1998, engineering a \$3.6 billion rescue of the giant hedge fund Long-Term Capital Management.
In 2001, slashing interest rates ...
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Federal Funds Rate & Reserves Market Contradiction
Edit: I do understand this isn't how things work anymore, since we are in a "Ample-Reserves Framework" and the quantity of reserves no longer makes a difference that much and it is primarily ...
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Government debt held by the Federal Reserve
The Federal Reserve delivers its profits, after expenses, to the US Department of the Treasury. The Federal Reserve also holds several trillion dollars' worth of government debt. So when the ...
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Federal Reserve Stock Ownership Requirement for Banks
Why are banks required to own stock in the Federal Reserve?
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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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In the US, if the Fed stops hiking the Fed Fund Rate, how does it affect inflation rate?
I know if the Fed continues to increase the Fed Fund Rate, inflation eventually goes down. But what if the Fed stops hiking the current Fed Fund Rate, how does it affect current inflation rate if the ...
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Calculating Core PCE Services excluding shelter/housing
On FRED, I would like to calculate monthly Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index) (PCEPILFE) (SA) excluding housing, either by removing it from this ...
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Current US inflation rate is 7.1% and Fed vows to reduce it to at least 2.00%, how long could that possibly take?
If the Fed keeps raising interest (e.g. 0.5%) and vows to reduce interest rate to at least 2.00%, how long could that possibly take? Thanks.
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Help with calculating the taylor rule
Can anyone help me understand where these figures are coming from as my own calculations produce numbers seem to be very different, help and guidance much appreciated.
For example in the first ...
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Is it possible for the stock market to beat inflation forever?
Just a few thoughts on the possibility of markets beating inflation in the long, long term (say, hundreds of years). I am a theoretical physicist, not an economist, so please forgive my ignorance.
I ...
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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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How is commercial bank reserve requirement enforced
More specifically:
What can be accounted as reserve (apart from actual reserve balance at a regional central bank) ?
how/where do banks file their reserve amount?
who verifies whether this informed ...
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Why do monetary authorities (e.g., central banks) aim to impact "short-term" interest rates? Why not also long-term interest rates, or both?
When the Fed or a central bank changes interest rates, this impacts short-term rates first and foremost. But why is it that short-term interests are impacted as opposed to short- AND long-term, or ...
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What is the refutation of this article about the FED being privately owned
What is the refutation of this article about the FED being privately owned
I find this article and I would like to know what is the refutation.
Please proper academic arguments.
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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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Does having a dual mandate erode central bank independence?
To begin with, CB (central bank) independence is defined as not being subject to government influence.
If CB only cares about inflation, it is easy to be independent.
If CB also needs to guarantee ...
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Do Overnight Reverse Repo Purchase (ON RRP) counterparties receive yield on the Treasuries that they are holding overnight?
When a Money Market Fund or other counterparty buys an RRP, they are receiving an interest bearing asset. Do they earn interest on that asset as well as the ON RRP rate which is published at the New ...
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How the fed influences treasury rates through open market operations
Lower yields through open market operations
When the fed wants to put downward pressure on treasury rates, one tool it can use is open market purchases of the tenor it wants to push yields down on. ...
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Maturing US Treasury Securities: value from TreasuryDirect vs New York Fed SOMA Holdings
TreasuryDirect
If I query TreasuryDirect for securities that are maturing in Aug 2022:
...
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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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Is it silly and why is it silly to automatically set the Federal Funds Rate to be a fixed math function of recent CPI, PPI etc?
Is it silly and why is it silly to automatically set the Federal Funds Rate to be a mathematical function of recent CPI, PPI etc? (Or other macroeconomics data). As a silly and simple example, if CPI ...
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Reserve Requirements for Banks
Does the reserve requirements for US depository instiutions require a multi branch institution as a whole be compliant, or each individual branch of that institution be compliant? For example imagine ...
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What treasury security SOMA holdings have matured so far this month?
Today is August 15th 2022.
Let's say I'd like to know the treasury security SOMA holdings that have matured so far this month as well as the total that will mature this month.
Here's one approach I've ...
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Federal Funds Rate vs Interest on Reserve Balances in 2022
In the US context: Circa 2020 the minimum reserve balance requirement was removed, so I am not sure why do institutions need to borrow and lend overnight reserves among themselves?
As far as I ...
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Federal Reserve Balance Sheet - June MBS Data
MBS balance sheet changes for June 2022
If I take the weekly changes of the MBS asset data:
https://fred.stlouisfed.org/graph/?g=SBRc
and look at June 2022 I get the following:
So \$1.882 billion was ...
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What's wrong with this argument that the fed's OMOs don't change the money supply
Is there anything facially stupid about the following argument that fed open market operations don't affect the money supply? And if not, are there any professional economists who have made this ...
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Deriving the H.4.1 MBS data from the Agency Mortgage-Backed Securities Operations
MBS changes for June 2022
If I go through the H.4.1 data:
https://www.federalreserve.gov/releases/h41/
and pull out the Mortgage-backed securities data, I get the following for June 2022:
So \$1,882,...
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How do I find out how much in US treasury securities the Fed purchased in a given month?
Let's say I'd like to find out how much the Fed purchased in US treasury securities in May 2022.
Here's one approach that I've been referred to.
Go to this page on TreasuryDirect:
https://www....
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How does letting securities mature, without reinvesting the proceeds, contract the money supply?
I am quoting Sheila Bair, who was Chair of the Federal Deposit Insurance Corporation from June 26 2006 to July 8 2011. "Bair received a bachelor's degree from the University of Kansas and a J.D. ...
user41487
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Money Creation in the Modern Economy
I've been reading through this paper and found it fascinating, but have a few lingering questions which I can't quite reconcile.
The paper really stresses the point that banks are not reserve ...
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Loans create deposits, banks "are not reserve constrained"?
It is often said that banks are not "reserve constrained" when it comes to lending, and that loans create deposits (and therefore commercial banks create money). I have some doubts about the ...
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Why did the Federal reserve balance sheet capital drop by 32% in Dec 2015?
Here's a graph of the capital on the Federal reserve balance sheet from 2003 until present:
https://fred.stlouisfed.org/series/WCTCL
Capital dropped by 32% in December 2015.
Is there anywhere I can ...
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Who benefits/is worse off from "death of forward guidance"?
A few months prior, I asked: What is the worst potential outcome if the Fed "loses credibility?" where a great answer pointed out that forward guidance allows a central bank to achieve ...
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Fed balance sheet changes - USTS vs MBS
This week's Fed balance sheet report
This week the balance sheet increased by 3 billion.
U.S. Treasury securities (USTS) decreased by 12 billion.
Mortage-backed securities (MBS) increased by 16 ...
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Treasury yield data
Interest rates on treasury.gov
This treasury.gov page lists the treasury security interest rates:
Interest rates on FRED
Graphs for each of the above treasury securities are also on FRED:
https://...
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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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Is it accurate to say reverse repo is 'conflicting' with monetary policy?
As seen in the chart, historically, reverse repo levels have been fairly small or at most, a few hundred billion dollars:
Now into the USD trillion handle, it's a more prominent fixture of the money ...
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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 does the dollar seem weak?
2:00 (GMT+8) - The FED raised interest rates at 0.75-percentage-point (75 basis points I believe, not sure with terminology but definitely now at 1.75%). But even so, why does the USD seem weaker? I ...
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The Fed's repo amount and TGCR shows positive pearson correlation. How so?
If I understand correctly, repo (https://fred.stlouisfed.org/series/RPONTSYD#0) → easier to borrow and the interest rate decreases → Tri-Party General Collateral Rate (TGCR) decreases → monetary ...
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Can the federal reserve just "add zeros" to a bank's balance?
In The G word season 1, episode 3 the show mentions that when the government wants to stimulate the economy, it issues debt and takes that borrowed money to spend on whatever (bailouts, unemployment, ...
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Is the Federal Reserve waiving itnerest payments on its treasury portfolio?
I read a rumor on a forum that the Federal Reserve has recently (since the pandemic) been waiving interest payments on its portfolio of US treasury bonds and notes.
I was unable to verify this rumor ...
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Do bond prices increase due to increase in demand or increase in money supply?
When the Fed buys bonds, what will happen to the price of bonds in the open market?
Answer Key: Reward 1 point for stating the price will increase due to increase in money supply. (0 point is awarded ...
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Is the following information related to interest rates, and the Federal Reserve accurate?
There are actually two interest rates that are directly affected by the Fed. The Federal Funds Rate is the interest rate banks charge other banks who borrow funds to meet reserve requirements. If that ...
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Does low nominal interest rate encourage lending?
In expansionary monetary policy, it's written:
The Fed purchases more government bonds to drive down interest rates and increase the money supply.
Now, low interest rate can infer two things:
...
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Does the Fed Change the Discount Rate in Monetary Policy?
Here, it's given that:
The first tool used by the Fed, as well as central banks around the world, is the manipulation of short-term interest rates. Put simply, this practice involves raising/lowering ...
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Why can't banks print infinite money by running up huge debts at the secondary discount window rate?
Banks in financial trouble can borrow from the Fed at 1% interest. Would anything stop a bank from borrowing $1M every year plus the interest on all prior debt? Since their ability to make interest ...
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