New York Federal Reserve
Not to mention with so much of politics, economy, culture, every other aspect of human existence – is taking place online, it is frightening that such a loose and baggy-can be detected concept as the “centre of the global economy,” in fact, somewhere real, in a certain gray-stone building in lower Manhattan, in fact; and within the building on a certain floor.
It is the open markets Desk of the New York Federal Reserve – it is a parquet that looks like all the other big open-plan office.
But the people here are not in the input is removed to the usual office E-Mail or message. What you have in your hands the basic levers of the entire global economy – U.S. interest rates.
You do pay interest? Probably. Someone with a mortgage, a car loan or a credit card. You can do it, earn? Again, it is very likely, if you ever had money in a savings account.
And if you’ve studied the instructions that you receive from your bank, you know, to spend the rate of interest paid to, or earned a large influence on how much money you are able to, on other things.
Huw Evans Picture Agency
What’s true for you is also true for the bank, too. How much it costs you to borrow money, influence, to spend how much you can afford. How much will it cost the bank to borrow money, directly affects how much it will charge for a loan, or how much it’s going to pay you on your savings.
And think of the savings. If you are not sure, you can get a higher return by putting your money out of the bank and putting it in the stock market in General, you.
In this way, the entire US can be seen-the economy as a long chain of interest.
If it is, then at the beginning of the chain, is the American Central Bank, the Federal Reserve. The interest rate set by the Fed, which is almost linked to every other interest rate in the world.
You may already have changes in this rate in the news. You happen to be in Washington, and decisions of the Federal Open Markets Committee (FOMC), usually accompanied by a jargon-filled press conference of the Chairman of the Federal Reserve
But the implementation of the policy of the FOMC, this is something that largely on the work of the Open Market Desk at the New York Fed.
All of the major commercial banks in the United States hold reserves at the Federal Reserve. Return the money to the banks to keep on hand are locations, in case too many people try to get your money deduct at the same time.
The main U.S. interest rate is what is known as the Federal funds rate. It is the amount of interest earn banks when they lend their excess reserves to each other.
The goal for this course is, what the FOMC in Washington decides, in its regular meetings. But the opponents in an effective rate is, where the Open markets Desk. If the FOMC, his statement is that it identifies a range for the federal funds rate. Currently, it is between 1-1.25%.
The easiest method is to hit the goal is to simply pay the banks interest on their reserves at the rate at the top of the range. Since the banks are obliged to try and not to make money for their shareholders, they are in the business of lending money at a lower price than you can get for the exit of their reserves.
The problem is that the banks borrow reserve funds from other major financial players, which is not part of the Federal Reserve System – money-market-Fund, for example, or government-funded organisations, which play a major role in the American housing market.
And because you are not give a part of the Federal Reserve System and maintains reserves at the Fed, they are sometimes willing to the reserve Fund of the banks to a rate below that at which the Fed’s payment of interest to banks on their reserves.
What does the open markets Desk, then offer to lend the money, of which non-bank lenders in the amount, at the lower end of the target. Again, no-one is working to lose money, so this creates a further floor for the federal funds rate, which sits between the two ends of the series.
And remember, we are all links in a chain of interest. If your bank has to pay 1.25% interest on need to the money to its reserve Fund is full, it will charge a higher interest rate for your mortgage, to make a profit, or you can pay a lower interest rate on your savings.
So, if the amount of money you have left after you have paid earns interest on your loan, or, if the amount of interest your savings changes, the effects of the work of the trader on the New York federal reserve. are feeling
In addition, because the US economy is the largest in the world, and so are the financial markets, borrowers, and investors everywhere are living in a world that is directly shaped by the men and women in the open markets desk in New York.