The Federal Reserve has one more tool that we have not discussed the REVERSE REPO. This is a transaction between the FED and a wide range of financial firms including firms that are NOT eligible to earn interest on balances with the FED. The reverse repo is a transaction in which the FED agrees to sell Treasury securities, and repurchase them on the following day at a pre-announced slightly higher price. The difference in the two prices implies the interest rate on the repo. Suppose that you have collected the following information from the FED website: the discount rate is 5%, the interest on reserves is 2%, and the fed funds rate is 2%. What will happen to the fed funds rate if the FED offers reverse repos at 2.5%? (Assumes that the size of the reverse repo is unlimited The FED has a huge stock of Treasury securities to sell.)