If the Fed wants to raise the federal funds rate it will

Question

Quizplus · Accepted Answer

The federal funds rate is the interest rate at which banks lend and borrow reserves from each other overnight. By selling government securities, the Fed decreases the quantity of reserves available in the banking system. This makes it more difficult and expensive for banks to borrow reserves and they must raise their own interest rates in order to attract lenders. As a result, the federal funds rate is pushed upward.

If the Fed Wants to Raise the Federal Funds Rate