ECO3011019 - Offsetting changes Dynamic OMO-a rduction in...

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ECO301 10/19/11 Offsetting changes: Defensive OMO - Change in reserve demand: loan growth - OMO to change the actual back to the target o Defensive OMO If demand for reserves changes more or less than Fed predicts, the actual fed funds rate can differ from the target, feds can try to correct this mistake the next day
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Unformatted text preview: Offsetting changes Dynamic OMO-a rduction in the target Fed Funds rate-Fed must bring the actual down to the new target-Must bring down interest but must make sure that increase in reserve demand doesnt push rate back up...
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This document was uploaded on 11/02/2011 for the course ECO 301 at Miami University.

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