This means that the signal of one particular policy rate can coexist with different levels of bank reserves – so long as our “liquidity management operations” ensure that the liquidity provided is neither excessive nor insufficient in relation to the demand by profit maximising banks that react to the opportunity cost of reserves.
Not surprisingly, the breadth of the scandal and the cost to investors has led many to reassess the benefits of owning mutual funds. One-third of respondents to a recent Gallup survey indicated that the scandal had made them less likely to invest in mutual funds, and three-quarters said they would pull assets out of a mutual fund complex that admitted to wrongdoing.