Is This the End of the Fed Funds Rate?

The transcript discusses the challenges and implications of managing the Federal Reserve's balance sheet in light of global regulatory requirements. It highlights the need for high-quality liquidity assets and the pressure on the Fed to maintain or even increase its balance sheet size. The conversation touches on the global impact of these policies, the shift from the Fed funds rate to the overnight bank funding rate, and the unintended consequences of liquidity absorption by banks, which may not benefit the real economy.

What was Tim Geithner's perspective on the Fed's balance sheet?

• It should be privatized.

• It is irrelevant to global markets.

• It requires careful long-term planning.

• It should be reduced immediately.

Why is it challenging for the Fed to shrink its balance sheet?

• Due to technological advancements.

• Because of political pressures.

• Because of the need for high-quality liquidity assets.

• Due to high inflation rates.

What is the new reference rate the Fed is considering?

• Prime rate

• Discount rate

• Overnight bank funding rate

• LIBOR

What is one unintended consequence of the Fed's balance sheet policies?

• Increased inflation

• Reduced bank liquidity

• Lack of impact on the real economy

• Higher interest rates

How does the Fed's global sensitivity affect its policy stance?

• It leads to higher interest rates.

• It makes the Fed more aggressive.

• It makes the Fed more dovish.

• It has no effect.