The Impact of Banks’ Cumulative Reserve Position on Federal Funds Rate Behavior
International Journal of Central Banking, Vol. 6, No. 3, pp. 101-118, September 2010
18 Pages Posted: 1 May 2007 Last revised: 9 Sep 2010
Date Written: September 7, 2010
Abstract
We analyze the impact that reserve levels accumulated through the preceding day in a reserve maintenance period have on the level of the federal funds rate each morning prior to when open market operations are arranged. Our empirical results and other evidence provided about intraday patterns of the federal funds rate demonstrate that the pace at which reserves are supplied over a maintenance period to meet banks’ total reserve requirements is an important determinant of federal funds rate behavior.
Keywords: federal funds rate, open market operations, reserve requirements
JEL Classification: E5, G21
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Interest on Reserves and Daylight Credit
By Huberto M. Ennis and John A. Weinberg
-
Unconventional Monetary Policies: An Appraisal
By Claudio E. V. Borio and Piti Disyatat
-
Unconventional Monetary Policies: An Appraisal
By Claudio E. V. Borio and Piti Disyatat
-
Precautionary Reserves and the Interbank Market
By Adam B. Ashcraft, James Mcandrews, ...
-
Precautionary Reserves and the Interbank Market
By Adam B. Ashcraft, James Mcandrews, ...
-
Divorcing Money from Monetary Policy
By Todd Keister, Antoine Martin, ...
-
The Liquidity Effect in the Federal Funds Market: Evidence from Daily Open Market Operations
By Seth B. Carpenter and Selva Demiralp