Yellen: Fed Has Legal Authority on IOR vs. Fed Funds Rate

The transcript discusses the Federal Reserve's use of financial tools and the legal framework governing interest rates on reserves. It highlights the debate over the legality of paying premiums on excess reserves, with a focus on the interpretation of Section 201 of the Financial Services Regular Relief Act. The conversation explores the authority of the Fed to set interest rates and the implications of paying premiums to large banks, questioning the legal limits and statutory interpretations involved.

What legal authority does the speaker believe they have regarding interest on reserves?

What implications does the phrase 'exceed the general level of short term interest rates' have in the context of the discussion?