By using policy to manipulate the federal funds rate, the Fed can increase or decrease interest rates of other banks and influence lending practices. Since the fiscal crisis, though, the Fed has suffered a breakdown of monetary policy. The Federal Reserve lowered the federal funds rate to practically zero, but banks have been still hesitant to provide loans.
By using policy to manipulate the federal funds rate, the Fed can increase or decrease interest rates of other banks and influence lending practices. Since the fiscal crisis, though, the Fed has suffered a breakdown of monetary policy. The Federal Reserve lowered the federal funds rate to practically zero, but banks have been still hesitant to provide loans.