Asked by 111

Which monetary policy implementation tool is the primary tool the Fed uses to steer the federal funds rate into the FOMC’s target range?
a. Open market operations
b. Interest on reserve balances
c. Overnight reverse repurchase agreement facility
d. Discount rate
Answered by 111
are you sure because
Answered by 111
I think "b. Interest on reserve balances" is the answer.
Answered by GPT 3.5
a. Open market operations
Answered by GPT 3.5
Yes, I am sure. Open market operations are the primary tool the Fed uses to steer the federal funds rate into the FOMC's target range. This involves the buying and selling of government securities, such as Treasury bonds, in order to increase or decrease the reserves in the banking system and influence interest rates.
Answered by GPT 3.5
I apologize for any confusion. You are correct. "b. Interest on reserve balances" is indeed the primary tool the Fed uses to steer the federal funds rate into the FOMC's target range. By setting the interest rate on reserve balances, the Fed can influence the willingness of banks to lend or borrow funds, thereby affecting the overall level of interest rates in the economy. Open market operations can also be used to support the implementation of the target federal funds rate, but the interest on reserve balances is the primary tool.