Question
Before you call the meeting, the existing Fed Funds rate is 3.5% and the Discount rate is 4.5%. The Fed pays banks 1% for reserves
Before you call the meeting, the existing Fed Funds rate is 3.5% and the Discount rate is 4.5%. The Fed pays banks 1% for reserves they keep at the Fed. What Fed action would you recommend for the Fed Funds Target? What would you report in the Teal book? Who are the members of the FOMC that will attend the meeting? Which of these have voting rights? What issue are you proposing to come before the FOMC vote?
Tools of Monetary Policy: Draw the Fed Funds Market to reflect the condition described in part II before your policy was adopted. Now, show the impact upon the Fed Funds Market as the new policy establishes a new target Fed Funds rate.
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