The framework for interest rate control during normalization Now I’d like to talk in more detail about the plans and tools for influencing short-term interest rates that the FOMC will use when it becomes appropriate to raise rates. A target range for the fed funds rate As I noted, during normalization the Committee will continue to communicate the stance of policy through a target for the federal funds rate. The fed funds rate is an overnight, unsecured interest rate in the market for reserves – the rate at which banks and certain other eligible entities borrow or lend balances held at the Fed. 1 The Committee also agreed that it would continue to set a target range for the federal funds rate during normalization. When the FOMC begins to remove accommodation, the level of reserves in the banking system will be very high and the Federal Reserve will be employing new tools to implement policy. Against this backdrop, the Committee has chosen to establish a target range, rather than a point target, in order to provide an appropriate degree of flexibility in policy implementation. A key advantage to targeting the fed funds rate is that the Committee has done so successfully for many decades. As a result, it’s a familiar rate for the public in judging the stance of monetary policy, and its continued use simplifies the Fed’s communications. While the Committee has targeted the fed funds rate for many decades, activity in the fed funds market has changed considerably in recent years.
25.02.2021  Latin American economies: developments and challenges Consejo Empresarial Alianza por Iberoamérica (CEAPI) Pablo Hernández de Cos Governor  Ladies and gentlemen, good afternoon. First of all, I would like to thank the Consejo Empresarial Alianza por Iberoamérica (CEAPI) and its President, Núria Vilanova, for the kind invitation to participate in this event. I should also like to take this opportunity to acknowledge the role that the CEAPI plays to support the business and investment of Spanish, Portuguese and Latin American firms. As you all well know, Latin America is a very important region for Spain owing to our close cultural and economic ties. It is likewise important for the Banco de España, as evidenced by one of the initiatives in our Strategic Plan for 2020-2024:1 positioning the Banco de España as a leading central bank for Latin America. This objective entails engaging in a series of actions, such as organising events, entering into and implementing cooperative agreements with central banks and institutions in the region, and the provision of services and international cooperation, all with a medium and long-term strategic view. It also means working to extend and improve our institution's analytical capacity and its visibility vis-à-vis the region’s economies and financial systems. Fortunately, it is already viewed as a benchmark in this regard within the Eurosystem.