How Many Reserves Does the Federal Reserve Need to Supply?
Abstract: The level of reserves the Federal Reserve needs to supply depends on the spread between the federal funds rate and the IOR rate. If policymakers choose to operate with a near-zero federal funds-IOR spread, then reserve balances of $1.5 trillion may be required to implement monetary policy. However, if policymakers opt for a higher federal funds-IOR spread, then reserve balances of about $1.1 trillion may suffice.
File format is application/pdf
Description: Full text
Provider: Federal Reserve Bank of Kansas City
Part of Series: Macro Bulletin
Publication Date: 2019-03-06