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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (88355)	1/12/2001 8:05:30 AM
From: Freedom Fighter	Read Replies (2) of 132070

Mike, I glance at the Federal Reserve's balance sheet from time to time and especially when there's a rate change. There's something I still don't quite understand. There usually doesn't seem to be much of a change to the Fed's assets when rates are cut (for example). What is the Fed actually doing? Is it simply saying "OK banks we have a new lower interest rate" and then simply responding to the new level of demand for reserves. I expected to see more of a correlation between interest rate changes and the Fed's actual action of purchasing/selling treasuries etc.. I think the Fed's balance sheet actually shrunk a little when they cuts rates last week. (I'll double check) Wayne

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