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The 2.25% overnight funding rate is the basis for a lot of other rates out there, like the loans the banks lending to the public. The Fed doesn't care about sa
by ww520 7y ago
The 2.25% overnight funding rate is the basis for a lot of other rates out there, like the loans the banks lending to the public. The Fed doesn't care about saving the banks a few millions. The Fed cares about setting the short term interest rate for the whole economy.
- beezle 7y agoThe target range is now 1.75-2.00 and the Fed also lowered the IOER (interest on excess reserves) 30bp to 1.80%, theoretically to keep the fed funds rate from moving out of the top of the range as happened earlier in the week (fed funds != repo) Personally, I think they need to return to the days when excess reserves were paid no interest at all. Unfortunately that would remove order 40B in free money money center banks have been booking the past few years.