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22 Dec 2015
Implementing the first Fed hike: So far, so good – Goldman Sachs
FXStreet (Delhi) – Elad Pashtan, Research Analyst at Goldman Sachs, notes that the Federal Reserve successfully lifted the federal funds rate from 0 to 25bps to the new range of 25 to 50bps, despite some initial fears that more than $2.5 trillion in excess reserves would exert downward pressure on overnight rates.
Key Quotes
“The FOMC largely put to rest any major concerns over its capacity to raise rates above zero with its announcement of an uncapped RRP facility, which provides a substantial capacity to absorb overnight cash from institutions ineligible to earn IOER.”
“Early reads from the market suggest that the effect of the rate hike transmitted across other overnight rates more broadly, reflecting the incrementally tighter stance of monetary policy.”
Key Quotes
“The FOMC largely put to rest any major concerns over its capacity to raise rates above zero with its announcement of an uncapped RRP facility, which provides a substantial capacity to absorb overnight cash from institutions ineligible to earn IOER.”
“Early reads from the market suggest that the effect of the rate hike transmitted across other overnight rates more broadly, reflecting the incrementally tighter stance of monetary policy.”