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The Federal Reserve want to raise interest
rates at some point in the future. And although there
is no hurry, the central bank is putting together its
strategy despite some significant differences of opinion
inside the institution.
Fed Chairman Ben Bernanke, fresh from a controversial,
but still valid confirmation is about to set on a difficult campaign,
that of taking away the proverbial punch bowl of low interest
rates from the markets and the economy. According to The Wall
Street Journal, Mr. Bernanke will be using a new tool, "an interest
rate the Fed pays banks on money they leave on reserve at the
central bank. Known as "interest on excess reserves," this rate
is now 0.25%."
The way this new device, which Congress gave
Mr. Bernanke in 2008 works, is this: "When the Fed is ready to
tap the brakes, it plans to raise the rate paid on excess reserves,
according to Fed officials in interviews and recent speeches.
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