Yet another option would be for the Fed to use its existing authority to operate in the markets for agency debt (for example, mortgage-backed securities issued by Ginnie Mae, the Government National Mortgage Association). Historical experience tends to support the proposition that a sufficiently determined Fed can peg or cap Treasury bond prices and yields at other than the shortest maturities.
4 As regards the broader macroeconomic impact of the increase in ADIs’ funding costs, it is important to remember that in the setting of monetary policy, the Reserve Bank Board is conscious of the various rates at which credit is being priced.