[palmer]

Toddster would argue that the Fed doesn’t set rates, the market does. True to an extent; 1 and 3 month rates have been dropping so the Fed is responding. But a big part of the reason the 1 and 3 month rates dropped is the anticipation that the Fed would lower their short term targets.

[groanup]

The Fed doesn't set any rate. It targets only one rate: the overnight Fed Funds rate. It can only influence that rate by adding and draining reserves in the system. The prevailing rates on overnight money are greatly influenced by this.

Why wouldn't they be? Banks can borrow from other banks at that rate and use that money for liquidity, lending, repo etc.

Also the banks can invest money overnight at that rate, greatly influencing the banks' return on excess funds.

[Toddsterpatriot]

Toddster would argue that the Fed doesn’t set rates, the market does.

What did the Fed set the 10 year rate at today? LOL!