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Fed Weighs Interest on Reserves as New Benchmark Rate

Jan. 26 (Bloomberg) -- Federal Reserve policy makers are considering adopting a new benchmark interest rate to replace the one they’ve used for the last two decades. The central bank has been unable to control the federal funds rate since the September 2008 bankruptcy of Lehman Brothers Holdings Inc., when it began flooding financial markets with $1 trillion to prevent the economy from collapsing.

Officials, who start a two-day meeting today, have said they may replace or supplement the fed funds rate with interest paid on excess bank reserves. “One option you might want to consider is that our policy rate is the interest rate on excess reserves and we let the fed funds rate trade with some spread to that,” Richmond Fed President Jeffrey Lacker told reporters on Jan. 8 in Linthicum, Maryland.

http://www.bloomberg.com/apps/news?pid=20601087&sid=akYMsCez...




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It's so convoluted, can't

It's so convoluted, can't tell what they are doing.

They must be really worried

They must be really worried about inflation...

Ventura 2012