Director of Research at the Atlanta Fed puzzled by interest rates http://macroblog.typepad.com/macroblog/2008/11/more-on-the-cha.html by David Altig
"Monetary policy, in this instance, presumably means manipulating the federal funds rate, and with that the story looks more or less complete: Having removed the opportunity cost to banks of holding reserves, expansion of reserves for payments policy reasons can be accomplished without changing the fed funds rate target, and conversely the funds rate target can be changed without compromising the provision of total reserves. I say more or less complete for a couple of reasons. The first has been highlighted by Jim Hamilton (among others): Thus far, the interest rate on excess reserves has failed to put a floor on the effective federal funds rate. Suffice it to say the puzzle has not yet been resolved.... " _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
