Experience Stern | News & Events

Excerpt from The Huffington Post -- "... The initial experience confirms that the Fed can raise interest rates even though the banking system is awash in excess reserves. By offering to pay interest on reserves, the Fed is placing a floor on the rate banks are willing to lend to households and firms. And, by offering to accept nonbank financial intermediaries overnight reverse repos in large volume, they are creating a floor under the market federal funds rate. If this pattern persists as policy rates rise, the new policy mechanics will be judged remarkably effective."

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