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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Does anybody know why the Fed Funds Effective Rate has 3 evenly spaced dips in between every FOMC meeting, that suddenly stop on March 21st 2018?
In general the effective rate was much more volatile the further back you go, but now it is perfectly straight, what has changed? The fact that it is exactly three evenly spaced dips of 8-10 basis ...
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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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What is the argument that suggests to the Federal Reserve that it is reasonable to cause a recession in order to prevent inflation?
The current risk of recession appears to be caused solely by the Federal Reserve's refusal to stop raising interest rates.
When making this decision, the FRB seems focused solely on the risk of ...
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Can a Federal District Bank be negative in SOMA shares after interdistrict settlement?
I looked at publications examining whether the FED interdistrict settlement could apply to the Target-2 system. While most of my questions were answered, I am still left with one big issue I could not ...
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Instead of quantitative easing why wouldn’t Stimulus at Checkout (SAC) work?
Instead of quantitative easing and interest rate reductions why wouldn’t Stimulus at Checkout (SAC) work?
What is SAC? When the Fed needs to stimulate the economy, using Point of Sale technology, SAC ...
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Do some investment banks make a spread by borrowing from the Fed at low rates and earning from higher Treasury and agency bond yields?
In his 60 Minutes interview for promoting his book, The Big Short, Michael Lewis says this:
if you look at their businesses right now they're heavily government dependent that if you were uh goldman ...
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Did countries ever default against Federal Reserve's swap line?
Did foreign countries ever default against Fed's swap line or Foreign and International Monetary Authorities ? Or is it technically possible? I guess they will lose their collateral, and it's a big ...
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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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Was the Federal Reserve Bailout of $85B to AIG in 2008 'printed money'
Was the federal reserve loan of $85 billion to AIG in 2008 done with existing reserves from the Treasury or were new reserves created and exchanged for assets at AIG similar to how the Fed performs ...
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How does the Fed supervise and regulate foreign branches of its member banks?
https://youtu.be/dka4fHQI4ZQ?t=46
According to the video, they say the Fed regulates and supervises foreign branches of its member banks, and I wanna know how the Fed does that. Does the Fed send ...
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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.
user40132
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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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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 [closed]
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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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 ...
