The Fed has control over exactly one interest rate: the interbank lending rate, aka the ''discount rate''. It does NOT have control over the celebrated Fed Funds rate. It merely sets a preferred target for that rate. The Fed has a good deal of suasion in this latter rate, but control it simply does not have.
Most of the time, lending institutions find the Fed's target reasonable and adhere to it, or very close to it. Today, the Fed Funds target is almost 30 bp too low for lending institutions, as demonstrated by the skew between the Eurodollar and Fed Funds markets.
The Fed controls interest rates? Nonsense. Learn your finance, ari. You've simply stuck your, er, finger in the electric fan here.
Wouldn’t (isn’t) the Fed Funds be inter-bank exchange rates while the Discount Rate be for the general public at large? I would think that the Discount Rate as applied to the economy weighs mightier than the Fed Funds rate. Is there a money chart to get this type of data/info?
The Fed has control over exactly one interest rate: the interbank lending rate, aka the ‘’discount rate’’.
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yes that is what I was talking about. The market, not the fed should set all rates. Otherwise you are bound to have imbalances.