Thursday, April 6, 2017

What rate is the fed targeting?

Dean Baker:Last year, the Fed refunded $113 billion or 0.6 percent of GDP to the Treasury. According to the projections from the Congressional Budget Office, this figure is projected to fall sharply to 0.2 percent of GDP in the next couple of years as the Fed reduces its holdings. Over the course of a decade, the difference in the amount rebated to the Treasury between a scenario where the Fed continues to hold $4 trillion in assets and one in which most of the assets are sold to the public would on the order of $900 billion.
Dean, you mean the reduction in interest charges? That is the .6 %, and it was refunded to a borrower paying the ten year rate. I do not care how you change the semantics, the Fed is  targeting the ten year rate, lower. The rate seems quite fixed actually.

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