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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Why do interest rates move together?
Why do interest rates (mortgage, LIBOR, Treasury yields, etc.) move together? What is the fundamental reason behind that?
From my understanding, what drives it is the Federal Funds Rate, which is the ...
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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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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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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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How can the Fed enforce exit criteria if they begin yield curve control?
Over the past year, the notion yield curve control has resurfaced and appeared on FOMC minutes, decades after its last implementation.
According to the Fed's introduction page:
As the U.S. continued ...
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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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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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Is The Money Masters (1996) correct in its main thesis?
The Money Masters is a 1996 documentary film that discusses the concepts of money, debt, taxes, and describes their development from biblical times onward.
Its main points were summarized by a ...
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Where can I retrieve a complete history of macro economic data annoucements?
I'd like to get the complete ( well at least the last 20 years) history of economic data announcement calendar firstly for US and secondly for G5 countries.
I have found many websites that propose the ...
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How does the Federal Reserve remove money from circulation?
I was watching a video about what gives money its value, and they say it's the total number of bills in circulation.
The Federal Reserve can print or remove money from circulation. But if somebody ...
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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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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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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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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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Negative interest rate on bond yield
In Black-Scholes model $r$ is defined as risk-free interest rate. What I have understood is that risk-free comes from the yields on sale of government bonds. What does that mean if the interest rate(...
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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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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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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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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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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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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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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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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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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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Do Fed OMOs directly and immediately increase M1 or M2 if they buy treasuries from a member bank? And what proportion of OMOs does that constitute?
I commonly hear that when the Fed conducts open market operations, it is directly increasing the money supply by exchanging newly created electronic money for US treasuries. But in the case where the ...
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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. ...
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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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How much leverage has the Federal Reserve taken on today (Jan 2016)?
http://nymag.com/daily/intelligencer/2015/12/big-short-genius-says-another-crisis-is-coming.html?mid=twitter-share-di
What makes you most nervous about the future? Debt. The idea that
growth will ...
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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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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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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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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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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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