How the Fed Adjusts the Fed Funds Rate within Its Target Range
At its June 2021 meeting, the FOMC maintained its target range for the fed funds rate at 0 to 25 basis points, while two of the Federal Reserve’s administered rates—interest on reserve balances and the overnight reverse repo (ON RRP) facility offering rate—each were increased by 5 basis points. What do these two simultaneous decisions mean? In today’s post, we look at “technical adjustments”—a tool the Fed can deploy to keep the FOMC’s policy rate well within the target range and support smooth market functioning.
Treasury Market Liquidity during the COVID-19 Crisis
A key objective of recent Federal Reserve policy actions is to address the deterioration in financial market functioning. The U.S. Treasury securities market, in particular, has been the subject of Fed and market participants’ concerns, and the venue for some of the Fed’s initiatives. In this post, we evaluate a basic metric of market functioning for Treasury securities—market liquidity—through the first month of the Fed’s extraordinary actions. Our particular focus is on how liquidity in March 2020 compares to that observed over the past fifteen years, a period that includes the 2007-09 financial crisis.
The Monetary Policy Advice Process at the New York Fed
Research economists discuss their process for providing advice on monetary policy to the New York Fed president ahead of FOMC meetings.
Connecting “the Dots”: Disagreement in the Federal Open Market Committee
People disagree, and so do the members of the Federal Open Market Committee (FOMC).
Is U.S. Monetary Policy Seasonal?
Many economic time series display periodic and predictable patterns within each calendar year, generally referred to as seasonal effects.
The Puzzling Pre-FOMC Announcement “Drift”
For many years, economists have struggled to explain the “equity premium puzzle”—the fact that the average return on stocks is larger than what would be expected to compensate for their riskiness.