15 In other words, the interest rate at this facility serves as a reservation rate, or the lowest rate lenders are willing to accept for lending out their cash. Ample Reserves As I mentioned earlier, the federal funds rate is determined by borrowers and lenders. In figure 3, it is the point where supply and demand intersect.
The current international conjuncture is perhaps more coincident in its cyclical shape than would be imposed on it by globalisation as such – the coincidence of downturns in the G3 is, to a large extent, idiosyncratic.