Which of the following statements is most accurate about the Fed's zero interest rate policy (ZIRP)?
A) The Fed has abandoned the ZIRP, recognizing the need to reduce nominal interest rates to below zero.
B) As of 2016, the ZIRP is being pursued by the Fed.
C) It ended in late 2015, with the Fed increasing the IOER and engaging in reverse repo transactions.
D) In an effort to end the ZIRP, the Fed prohibited nonbank lending to banks.

Question

Quizplus · Accepted Answer

The ZIRP policy did indeed end in late 2015, with the Fed increasing the IOER (Interest on Excess Reserves) and engaging in reverse repo transactions. Option A is incorrect because the Fed has not reduced nominal interest rates below zero, and option B is incorrect because as of 2016, the Fed was no longer pursuing the ZIRP policy. Option D is also incorrect because the Fed did not prohibit nonbank lending to banks as a way of ending the ZIRP.

Which of the Following Statements Is Most Accurate About the Fed's