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Lou Crandall & Joseph Wang: A Monetary Plumbing Masterclass

Forward Guidance

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The Dangers of Cutting the RFP Rate

The Fed has been very insistent on the fact that it wants to separate interest rate policy from financial stability policy. The idea of easing, the idea of lowering the RFP rate by 15 or 20 basis points as a technical tweak wouldn't violate their monetary policy guidance. If people become uneasy about banks, then they want to flood into treasury bills but eventually treasury bill yields fall and you're making significant sacrifice.

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