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Artificially setting the fed funds rate at 0.25- 0.50% is essentially giving money for almost free. That rate was even lower before last fall.
by jazzyk 10y ago
Artificially setting the fed funds rate at 0.25- 0.50% is essentially giving money for almost free. That rate was even lower before last fall.
- bogomipz 10y agoThe Fed funds rates is not money from the Fed. The Fed funds rate is the amount that banks charge to borrow from each other, bank to bank. And this money banks lend each other is NOT and can NOT be used for loans, it is used to cover their Federal Reserve obligations. Also the Fed does not actually set this rate, it can only try to influence it via Open Market Operations, so no it not the same thing at all, most certainly not "essentially."
- jazzyk 10y agoWhether obtained as Discount or Fed Funds, the money allows the bank to loan out more money, because it increases the bank's reserve, no?
- dredmorbius 10y agoDoes not the Fed effectively control banks' demand for money through reserve ratios?