I believe my readers are very familiar with my methodology already. Therefore, I'll just post the 4 interest rates for my readers.
Iorr: 1.55% (falling), Max limit is 1.75% as set by the US FED.
Effr: 1.55% (falling)
Ioer: 1.55% (falling)
On RRP: 1.45% (falling), Min limit is 1.5% as set by the US FED.
Effr: 1.55%
Ioer: 1.55%
The Effr-Ioer spread is zero which means there is no monetary tightening condition. However, the On RRP (1.45%) is below the minimum limit set by the US FED and the other rates are still falling. The On RRP is lower than the set limit because of the repo market intervention.
1 comment:
Have you got it right?
Let's understand the roles of the US FED first before we go any further.
https://www.federalreserve.gov/aboutthefed/pf.htm
After understanding the roles of the US FED, we know that the US financial stability is important to the US FED.
The Effr-Loer spread was widening in October 2019 but the November 2019 spread had abated which denoted stability. Therefore, there was no urgent need to cut the interest rates any further. I also emphasized that there was no monetary tightening in my post. Did you get my hint?
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