The Fed Still Needs to Figure Out How to Raise Rates

Wed, March 25, 2015


For all the talk about when Federal Reserve policy makers are going to raise interest rates, they haven’t quite figured out how to do it.

...Camp, along with money-market economists such as Lou Crandall of Wrightson ICAP LLC, says the Fed will need to more than triple the use of its main tool, known as the reverse-repo program, to at least $1 trillion from the current $300 billion per day limit.

...“It will take somewhat greater use of the Fed’s tools to get the funds rate into the middle of a 25 to 50 basis-point range than it does to keep it in the middle of a 0 to 25 range,” said Crandall, chief economist at Wrightson ICAP in Jersey City.