Fed Funds Archive

Fed funds rate, control of

[Skip to the end] Bernanke’s Cash Injections Risk Eclipse of Fed’s Benchmark Rate By Craig Torres Bernanke said in a congressional hearing yesterday that the expansion of the Fed’s balance sheet “makes it more difficult to control the federal funds rate.” It is “still an issue we are working on,” he told ...Read More

Crisis may make 1929 look a ‘walk in the park’

Crisis may make 1929 look a ‘walk in the park’ Telegraph by Ambrose Evans-Pritchard As central banks continue to splash their cash over the system, so far to little effect, Ambrose Evans-Pritchard argues that things risk spiralling out of their control Twenty billion dollars here, $20bn there, and a lush half-trillion from ...Read More

Friday mid day

Food, crude, metals up, dollar down, inflation up all over the world, well beyond CB ‘comfort levels.’ Nov new home sales continue weak, though there are probably fewer ‘desirable’ new homes priced to sell, and with starts are down the new supply will continue to be low for a while. The December ...Read More

Saudi/Fed teamwork

Looks like markets are still trading with the assumption that as the Saudis/Russians hike prices the Fed will accommodate with rate cut. That’s a pretty good incentive for more Saudi/Russian oil price hikes, as if they needed any! Likewise, the US is a large exporter of grains and foods. Those prices are ...Read More

Fed finally gets it?

The Fed was finally successful in cutting the fed funds/libor spread with a glorified 28 day repo, after failing to narrow the spread with 100 bp of rate cuts. Narrowing the ff/libor spread ‘automatically’ lowers various libor based funding rates, probably including jumbo mtg rates, which have been a concern of the ...Read More

Financing desk comments

I’m lost for an explanation as to whey the Fed ignored the year end liquidity issue entirely, after alluding to it in various speeches and allowing the impression that they were going to address it at the meeting persist. Keep me posted as to how LIBOR is over the turn (as well ...Read More

Fed’s best move

From the Fed’s theoretical framework, their best move is: ♦ Cut the discount rate to 4.5 ♦  Leave fed funds at 4.5 ♦ Remove the stigma from the window ♦ Allow term window borrowing over the turn ♦ Accept any ‘legal’ bank assets as collateral from member banks in good standing ♦ ...Read More