Plot the data for both interest rates on the same graph

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Reference no: EM132649123

1) Go to the website of the Federal Reserve Bank of St. Louis (FRED) (https://fred.stlouisfed.org/) and find the most recent daily values for the effective federal funds rate (EFFR) and the interest rate on excess reserves (IOER).

-Plot the data for both interest rates on the same graph for the period spanning April 3, 2020 through September 28, 2020. To perform this task, use the ADD LINE option available after selecting the EDIT GRAPH tool. -

a. How did the daily effective federal funds rate compare to the IOER over this period? During what month did the spread between these two overnight rates start to change?

b. Do you think this change in the spread between IOER and EFFR could reflect changes in the relative bargaining power of the financial institutions that have recently been participating in the interbank market for reserves? Elaborate. Note: over this same time period, the Fed has been offering overnight reverse repurchase agreements at an offering rate (ON-RRP) of zero percent.

Reference no: EM132649123

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