Once upon a time, U.S. monetary policy was conducted with its primary target defined in terms of the fed funds rate, which is the interest rate on an overnight loan of Federal Reserve deposits between private banks or other institutions that hold accounts with the Fed.
Tag Archives: interest rate
The Natural Rate of Interest Is Zero
by Mathew Forstater and Warren Mosler, MoslerEconomics.com This paper argues that the natural, nominal, risk free rate of interest is zero under relevant contemporary institutional arrangements. However, as Spencer Pack reminded us, “[n]atural and nature are complex words, fraught with ambiguity and contradiction” (1995, 31). The sense in which we wish to employ the term …