The Federal Reserve has also been developing a number of additional tools to reduce the large quantity of reserves held by the banking system, which will improve the Federal Reserve’s control of financial conditions by leading to a tighter relationship between the interest rate paid on reserves and other short-term interest rates.
The June quarter national accounts recorded an increase in GDP growth over the past financial year to a pace that was actually close to trend (in year-ended terms; Graph 4). Moreover, this pace was a bit stronger than we had forecast a year ago.