Fed blog: Untangling the U.S. Dollar Funding Market

From Policy Rates to Market Rates: Untangling the U.S. Dollar Funding Market
Gara Afonso, Fabiola Ravazzolo, and Alessandro Zori

How do changes in the rate that the Federal Reserve pays on reserves held by depository institutions affect rates in money markets in which the Fed does not participate? Through which channels do changes in the so-called administered rates reach rates in onshore and offshore U.S. dollar money markets? In this post, we answer these questions with the help of an interactive map that guides us through the web of interconnected relationships between the Fed, key market players, and the various instruments in the U.S. dollar funding market, highlighting the linkages across the short-term financial products that form this market.

The full article is available at https://libertystreeteconomics.newyorkfed.org/2019/07/from-policy-rates-to-market-ratesuntangling-the-us-dollar-funding-market.html

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