Conduct of Monetary Policy Overview

A set of flashcards covering key vocabulary and concepts related to the conduct of monetary policy as discussed in the lecture.

Federal Funds Rate (FFR)

The interest rate banks charge each other for overnight loans of reserves.

Fractional Reserve System

A banking system in which banks hold only a fraction of deposits as reserves.

Reserve Requirement

The minimum percentage of deposits that banks must hold as reserves.

Discount Window

A facility allowing banks to borrow money from the Federal Reserve in case of short-term liquidity needs.

Open Market Operations (OMOs)

The process by which the Federal Reserve buys or sells U.S. Treasury securities to influence the money supply.

Interest on Reserves (IOR)

The interest rate paid by the Federal Reserve on the reserves held by banks.

Quantitative Easing (QE)

An unconventional monetary policy where the Fed buys long-term securities to increase the money supply and lower interest rates.

Discount Rate

The interest rate charged by the Federal Reserve for loans to commercial banks.

Liquidity

The availability of liquid assets in the banking system.

Lender of Last Resort

The role of the Federal Reserve to provide funds to banks in times of financial distress.