[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-325829-105":59,"doc-detail-325829-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","federal-funds-rate-volatility-economic-commentary","Federal Funds Rate Volatility - Economic Commentary","","Federal funds rate volatility spiked unusually during late December 1990 and early 1991, with day-to-day movements far larger than in prior periods and only fading later. The text explains the rate as the interest charged on unsecured overnight loans between banks at Federal Reserve Banks and discusses how volatility matters when it may reflect confusion over FOMC policy intentions. It argues that policy easings were not the main cause and identifies reduced reserve requirements as a key driver, altering settlement-day behavior and limiting normal dampening responses in short-maturity markets.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/federal-funds-rate-volatility-economic-commentary/325829/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/federal-funds-rate-volatility-economic-commentary/325829.png","ImageObject",300,407,{"name":92,"@type":93},"Sage","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-22","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":29},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What is the federal funds rate in this document?","Question",{"text":112,"@type":113},"It is the interest rate banks charge one another for unsecured overnight loans using their deposit balances at Federal Reserve Banks.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"Why does increased federal funds rate volatility matter?",{"text":117,"@type":113},"It is a serious concern if uncertainty about FOMC policy intentions leads market participants to make bad decisions.",{"name":119,"@type":110,"acceptedAnswer":120},"What does the document identify as a major contributor to the volatility episode?",{"text":121,"@type":113},"A substantial cut in reserve requirements in December 1990, which changed reserve positions and reduced the ability of borrowers and lenders to damp day-to-day variations.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},325829,1790222999,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":29,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},687197207057,"https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0","by Diana Dumitru and E.J.Stevens  \nT  \nIhe federal funds rate was unusuallyvolatile for several months starting in lateDecember 1990.Day-to-day changesover this period were far greater than inprevious years,although the differenceseems to have disappeared recently(figure 1A).  \nThe federal funds rate is the interest ratebanks charge one another for unsecuredovenight loans of their deposit balancesat Federal Reserve Banks.Borrowersand lenders in the funds market arealmost exclusively depository institu-tions,who see the funds rate as themarket price at which Fed deposits canbe acquired to make payments or tomeet reserve requirements.The rate isalso a short-run indicator of the mone-tary policy intentions of the FederalOpen Market Committee(FOMC),which controls the supply of reserveassets.Volatility would be a serious con-cern ifconfusion about FOMC policyintentions caused market participants tomake bad decisions.  \nSharp changes in the funds rate aretypical near the end of a year,whenfinancial institutions make temporarybalance-sheet adjustments,a practiceknown as \"window dressing.\"Becausethese adjustments usually last only afew days,they cannot explain the re-cent protracted period of funds ratevolatility.Easing of monetary policyduring this unstable period,which al-lowed a number of downward adjust-ments in the rate,also fails to accountfor much of the variation.More impor-tant are two effects of an unrelated sub-stantial cut in reserve requirements inDecember.The first is that until banks  \n# Federal Funds Rate Volatility\n\nand the Fed learned to manage smallerreserve positions,the funds rate movedsharply on final,settlement days ofreserve maintenance periods.The sec-ond effect is that the lower quantity ofrequired reserves prevented borrowersand lenders from responding to day-to-day funds rate movements in the waythat normally dampens variations.ThisEconomicCommentary examines therole of policy easings and reducedreserve requirements in the recent epi-sode of funds rate volatility.  \n## ■ Policy Easings\n\nNeither actual changes in monetary pol-icy nor potential market uncertaintyabout policy intentions appears to havecontributed significantly to the increasedfunds rate volatility.The FOMC imple-ments monetary policy by specifying adesired degree of reserve restraint to bemaintained by open-market operations,nomally reflected in the size of the ratespread between the discount rate(therate banks pay to borrow directly fromthe Fed)and the funds rate.The lowerthe degree of restraint,the lower will bethe funds rate relative to the discountrate.Market participants and analysts(\"Fedwatchers\")read public announce-ments of discount rate changes and arequite adept at recognizing independentFOMC adjustments of reserve restraint.Deducting market estimates of occa-sional policy-intended changes fromactual changes in the level of the fundsrate has little effect on the volatilitycomparisons,as shown in figure 1B.  \nIncreased market uncertainty about cur-rent andimpending policy also can  \nAugust 15,1991  \nA cut in reserve requirements late in1990 apparently contributed to in-creased federal funds rate volatilityearly this year.Legal reserve require-ments are the principal source ofdemand for holding deposits atFederal Reserve Banks.This articlesuggests that although the recentepisode of funds rate volatility wasshort-lived and did not cloud marketperceptions of Federal Reserve policyintentions,the effect of dwindlingreserve deposits on banking,payment,and monetary policy practices shouldbe examined more extensively.  \naffect the funds rate.The less certainthe perception of policy,the greaterwillbe the range within which interestrates might trade without inducing bor-rowers or lenders to enter the market totake advantage of low or high rates.However,market commentary reportedthrough wire information services andin newspapers during this episode con-tained no hint of unusual,or unusuallywide,differences of opinion about thefunds-rate level th","cbCaiqhufokMDDdE","https://ap.wps.com/l/cbCaiqhufokMDDdE","pdf",1238379,"English","# Federal Funds Rate Volatility\n## Policy Easings\n## Reduced Reserve Requirements","[{\"question\":\"What is the federal funds rate in this document?\",\"answer\":\"It is the interest rate banks charge one another for unsecured overnight loans using their deposit balances at Federal Reserve Banks.\"},{\"question\":\"Why does increased federal funds rate volatility matter?\",\"answer\":\"It is a serious concern if uncertainty about FOMC policy intentions leads market participants to make bad decisions.\"},{\"question\":\"What does the document identify as a major contributor to the volatility episode?\",\"answer\":\"A substantial cut in reserve requirements in December 1990, which changed reserve positions and reduced the ability of borrowers and lenders to damp day-to-day variations.\"}]","Federal Funds Rate Volatility - Economic Commentary | PDF",1789971516,13]