Summary: KBTX interviewed Dennis Jansen on the Fed’s recent decision to continue to raise interest rates in a story that ran on September 21, 2022.
At its latest meeting, the Federal Reserve announced a 75-basis point interest rate increase. "The Federal Reserve System is trying its best to reduce the inflation rate and their main tool for reducing the inflation rate is to raise interest rates. The interest rate we're really talking about… [is] the Federal Funds rate. It's an overnight lending rate between financial institutions but also, and probably more importantly, an interest rate on reserve balances that are held at the Fed and this interest rate on reserves was raised in tandem with the Federal Funds rate."
Although the rate increase has brought much media attention, it's also important to take notice of past rates. "The Federal Funds rate in the far past was quite a bit higher than it was today and, at the same time, the Federal Funds rate and the interest rate on reserves being at basically 3.15% is higher than it has been in recent times. We've had the rate be at practically zero for a fair amount of time during and right after what I'll call the 'Covid recession' and the Fed is raising interest rates now because the inflation rate has been so high."
See the full interview at KBTX.
At its latest meeting, the Federal Reserve announced a 75-basis point interest rate increase. "The Federal Reserve System is trying its best to reduce the inflation rate and their main tool for reducing the inflation rate is to raise interest rates. The interest rate we're really talking about… [is] the Federal Funds rate. It's an overnight lending rate between financial institutions but also, and probably more importantly, an interest rate on reserve balances that are held at the Fed and this interest rate on reserves was raised in tandem with the Federal Funds rate."
Although the rate increase has brought much media attention, it's also important to take notice of past rates. "The Federal Funds rate in the far past was quite a bit higher than it was today and, at the same time, the Federal Funds rate and the interest rate on reserves being at basically 3.15% is higher than it has been in recent times. We've had the rate be at practically zero for a fair amount of time during and right after what I'll call the 'Covid recession' and the Fed is raising interest rates now because the inflation rate has been so high."
See the full interview at KBTX.
