How the Federal Reserve’s Monetary Policy Implementation Framework Has Evolved

Gara Afonso, Lorie Logan, Antoine Martin, Will Riordan and Patricia Zobel
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Lorie Logan: https://www.dallasfed.org/fed/leadership/Logan.aspx

No 20220110, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In a series of four posts, we review key elements of the Federal Reserve’s monetary policy implementation framework. The framework has changed markedly in the last two decades. Prior to the global financial crisis, the Fed used a system of scarce reserves and fine-tuned the supply of reserves to maintain rate control. However, since then, the Fed has operated in a floor system, where active management of the supply of reserves no longer plays a role in rate control, but rather the Fed’s administered rates influence the federal funds rate. In this first post, we discuss the salient features of the implementation framework in a stylized way.

Keywords: MPI; monetary policy implementation (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2022-01-10
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
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