It is commonly believed that the Fed's ability to control the federal funds rate stems from its ability to alter the supply of liquidity in the overnight market through open market operations. This paper uses daily data compiled by the author from the records of the Trading Desk of the Federal Reserve Bank of New York over the period March 1, 1984, through December 31, 1996. The author analyzes the Desk's use of its operating procedure in implementing monetary policy and the extent to which open market operations affect the federal funds rate-- the liquidity effect. The author finds that the operating procedure was used to guide daily open market operations. However, there is little evidence of a liquidity effect at the daily frequency and even less evidence at lower frequencies. Consistent with the absence of a liquidity effect, open market operations appear to be a relatively unimportant source of liquidity to the federal funds market.

The Federal Reserve implements its monetary policy by using open market operations in United States government securities to target the federal funds rate. A substantial decline in the stock of United States Treasury debt could interfere with the conduct of monetary policy, possibly forcing the Fed to rely more heavily on discount window lending or to conduct open market transactions in other types of securities. Either choice would cause the implementation of monetary policy to resemble the methods used by the Fed before World War II. This paper describes two things: (1) how the Fed implemented monetary policy before the war and (2) the conflicts that arose within the Fed over the allocation of private-sector credit when discount window loans and Fed purchases of private securities were a substantial component of Federal Reserve credit. Those conflicts help explain the Fed's failure to respond vigorously to the Great Depression. The experience suggests that a renewed reliance on the discount window or on open market operations in securities other than those issued by the United States Treasury could hamper the conduct of monetary policy if it leads to increased pressure on the Fed to affect the allocation of credit.

The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest *** trillion U.S. dollars at the end of 2007, it ballooned to approximately **** trillion U.S. dollars by October 29, 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic—both of which resulted in negative annual GDP growth in the U.S.—showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached ***** percent in 2022, the highest since 1991. However, by August 2025, inflation had declined to *** percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at **** percent in August 2023, before the first rate cut since September 2021 occurred in September 2024. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2024, the Fed reported a negative net income of ***** billion U.S. dollars, a stark contrast to the ***** billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over *** billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of ****** billion U.S. dollars in the same year.

The interest rate set by the Federal Reserve is a crucial tool for promoting economic conditions that meet the mandate established by the United States Congress, which includes high employment, low and stable inflation, sustainable economic growth, and the moderation of long-term interest rates. The interest rates determined by the Fed directly influence the cost of credit, making financing either more accessible or more restrictive. When interest rates are low, there is a greater incentive for consumers to purchase homes through mortgages, finance automobiles, or undertake home renovations. Additionally, businesses are encouraged to invest in expanding their operations, whether by purchasing new equipment, modernizing facilities, or hiring more workers. Conversely, higher interest rates tend to curb such activity, discouraging borrowing and slowing economic expansion.

The dataset analyzed contains information on the economic conditions in the United States on a monthly basis since 1954, including the federal funds rate, which represents the percentage at which financial institutions trade reserves held at the Federal Reserve with each other in the interbank market overnight. This rate is determined by the market but is directly influenced by the Federal Reserve through open market operations to reach the established target. The Federal Open Market Committee (FOMC) meets eight times a year to determine the federal funds rate target, which has been defined within a range with upper and lower limits since December 2008.

Furthermore, real Gross Domestic Product (GDP) is calculated based on the seasonally adjusted quarterly rate of change in the economy, using chained 2009 dollars as a reference. The unemployment rate represents the seasonally adjusted percentage of the labor force that is unemployed. Meanwhile, the inflation rate is determined by the monthly change in the Consumer Price Index, excluding food and energy prices for a more stable analysis of core inflation.

The interest rate data was sourced from the Federal Reserve Bank of St. Louis' economic data portal, while GDP information was provided by the U.S. Bureau of Economic Analysis, and unemployment and inflation data were made available by the U.S. Bureau of Labor Statistics.

The analysis of this data helps to understand how economic growth, the unemployment rate, and inflation influence the Federal Reserve’s monetary policy decisions. Additionally, it allows for a study of the evolution of interest rate policies over time and raises the question of how predictable the Fed’s future decisions may be. Based on observed trends, it is possible to speculate whether the target range set in March 2017 will be maintained, lowered, or increased, considering the prevailing economic context and the challenges faced in conducting U.S. monetary policy.

🏛️ Federal Reserve Document Scraper

1. Dataset description

This repository contains code for downloading and organizing Federal Reserve documents from the official Federal Reserve Board website.

These files were used as part of my NLP project. While collecting data, my data collection code is inspired by centralbank_analysis by yukit-k. However, that implementation had some limitations:

❌ Incomplete handling of newer HTML structures on the Fed website

❌ No support for Greenbook/Tealbook files

❌ File naming and folder structure not ideal for downstream processing

❌ No handling of failed downloads or noisy formatting

So I made som key Improvements:

✅ Supports both Greenbook and Minutes. You can choose which type to download

✅ Automatic directory organization. Files are saved using a consistent format as:

FOMC_[document type]_YYYY-MM-DD

✅ Duplicate check & resume support: Prevents redundant downloads and handles broken links gracefully

✅ Modular and extensible codebase Easy to extend for other Fed documents (e.g., SEP, transcripts)

2. Data detail

This repository contains modules for downloading and processing various official publications of the Federal Open Market Committee (FOMC). These documents, produced and released by the Federal Reserve, provide detailed insight into U.S. monetary policy formation, communication, and economic analysis over time.

Below is a reference guide to the major FOMC document types represented in this repository.

📅 FomcAgenda.py – Meeting Agendas

Agendas are created by the FOMC Secretariat in coordination with the Chair and outline the topics of discussion for each meeting, including standard items (e.g., open market operations, economic outlook) and special topics. Participants receive the agenda about one week in advance.

📄 FomcStatement.py – Policy Statements

FOMC statements are brief summaries of monetary policy decisions released immediately after each meeting. These statements have become a key communication tool since 1994 and are now issued after every scheduled meeting, even if policy remains unchanged.

📝 FomcMinutes.py – Meeting Minutes

Minutes provide a concise, narrative summary of policy discussions and rationales. Since 2004, they are released three weeks after each meeting. The minutes include details on voting outcomes and dissenting views, and are eventually included in the Fed’s Annual Report.

🧾 FomcPresConfScript.py – Press Conference Transcripts

Beginning in 2011, the Fed Chair has held press conferences following certain FOMC meetings. These transcripts document the Chair’s remarks and responses to journalists, offering additional context and forward guidance. Released shortly after the meeting.

🗣️ FomcMeetingScript.py – Meeting Transcripts

Verbatim transcripts of FOMC meetings, produced from audio recordings and lightly edited for readability. They are released with a 5-year delay. For meetings prior to 1994, transcripts were reconstructed from raw records and may contain transcription uncertainties.

📚 FomcGreenbook.py – Greenbook (1964–2010)

The Greenbook, officially titled Current Economic and Financial Conditions, was prepared by Board staff and delivered to FOMC members six days before each meeting. It provided forecasts, data analyses, and economic outlooks.

Part 1: Summary and forecast

Part 2: Detailed breakdowns

Supplement: Late-breaking updates

📘 FomcBlueBook.py – Bluebook (1965–2010)

The Bluebook, titled Monetary Policy Alternatives, outlined potential policy options and risks. It was distributed shortly after the Greenbook and informed FOMC decisions. The document evolved from earlier versions like Money Market and Reserve Relationships.

🧠 FomcTealbook.py – Tealbook (2010–Present)

The Tealbook replaced both the Greenbook and Bluebook in June 2010. It is split into two parts:

Tealbook A: Current Situation and Outlook — Forecasts and financial developments

Tealbook B: Strategies and Alternatives — Policy options and simulations

Both are released with a 5-year lag.

📙 FomcBeigeBook.py – Beige Book

The Beige Book, published eight times a year, summarizes anecdotal economic conditions across the 12 Federal Reserve Districts. Based on business surveys, interviews, and internal reports, it is released ~two weeks before each meeting.

🧾 FomcTestimony.py – Testimony before Congress

This includes the Chair’s Semiannual Monetary Policy Report to Congress and other testimonies. These communications explain the Fed’s outlook and policies directly to lawmakers and the public.

📚 References

Federal Reserve – FOMC Archive

Wikipedia – Federal Open Market Committee

A central bank is the term used to describe the authority responsible for policies that affect a country’s supply of money and credit. More specifically, a central bank uses its tools of monetary policy—open market operations, discount window lending, changes in reserve requirements—to affect short-term interest rates and the monetary base (currency held by the public plus bank reserves) and to achieve important policy goals.

The inflation rate in the United States declined significantly between June 2022 and September 2025, despite rising inflationary pressures towards the end of 2024. The peak inflation rate was recorded in June 2022, at *** percent. In August 2023, the Federal Reserve's interest rate hit its highest level during the observed period, at **** percent, and remained unchanged until September 2024, when the Federal Reserve implemented its first rate cut since September 2021. By September 2025, the rate dropped to **** percent, signaling a shift in monetary policy. What is the Federal Reserve interest rate? The Federal Reserve interest rate, or the federal funds rate, is the rate at which banks and credit unions lend to and borrow from each other. It is one of the Federal Reserve's key tools for maintaining strong employment rates, stable prices, and reasonable interest rates. The rate is determined by the Federal Reserve and adjusted eight times a year, though it can be changed through emergency meetings during times of crisis. The Fed doesn't directly control the interest rate but sets a target rate. It then uses open market operations to influence rates toward this target. Ways of measuring inflation Inflation is typically measured using several methods, with the most common being the Consumer Price Index (CPI). The CPI tracks the price of a fixed basket of goods and services over time, providing a measure of the price changes consumers face. At the end of 2023, the CPI in the United States was ****** percent, up from ****** a year earlier. A more business-focused measure is the producer price index (PPI), which represents the costs of firms.

Sterilized intervention is generally ineffective. Countries that conduct monetary policy using an overnight, interbank rate as an intermediate target automatically sterilize their interventions. Nonsterilized interventions can influence nominal exchange rates, but they conflict with price stability unless the underlying shocks prompting them are domestic in origin and monetary in nature. Nonsterilized interventions, however, are unnecessary since standard open-market operations can achieve the same result.

Term Repurchase Agreements Market Outlook

According to our latest research, the global term repurchase agreements market size reached USD 17.8 trillion in 2024, with a robust compound annual growth rate (CAGR) of 8.2% from 2025 to 2033. The market is projected to expand significantly, attaining a value of USD 35.2 trillion by 2033. This impressive growth is primarily driven by the increasing demand for short-term liquidity solutions among financial institutions and the rising use of term repos as an effective monetary policy tool by central banks worldwide. As per our latest research, the market’s expansion is further fueled by evolving regulatory frameworks and the proliferation of digital trading platforms, which enhance transparency and efficiency in repo transactions.

One of the major growth factors for the term repurchase agreements market is the heightened need for liquidity management across global banking and financial systems. In the aftermath of recent economic disruptions and ongoing volatility in capital markets, financial institutions are increasingly turning to term repos to manage their balance sheets efficiently. The flexibility of term repurchase agreements allows institutions to obtain short- to medium-term funding without the need to liquidate assets, thereby minimizing market impact and supporting overall financial stability. Additionally, the growing complexity of banking regulations, such as Basel III and other liquidity coverage requirements, has compelled banks to adopt more sophisticated liquidity management tools, further propelling the adoption of term repos.

Another significant driver is the rapid digital transformation within the financial sector, which has revolutionized the execution and settlement of repurchase agreements. The integration of advanced technologies, such as blockchain and automated trading platforms, has streamlined repo transactions, reduced operational risks, and improved transparency. This technological evolution has attracted new participants to the market, including non-traditional financial entities and fintech companies, thereby expanding the market’s reach. Furthermore, the advent of electronic trading platforms has facilitated cross-border repo transactions, enabling greater participation from international investors and contributing to market growth.

The increasing involvement of central banks in the term repurchase agreements market is also a key growth catalyst. Central banks in major economies, such as the Federal Reserve, European Central Bank, and the People’s Bank of China, have frequently used term repos as a tool for open market operations to regulate money supply and stabilize interest rates. This active engagement not only supports liquidity in the banking system but also instills confidence among market participants. Moreover, the growing issuance of government securities and high-quality collateral has provided a robust foundation for the repo market, enhancing its attractiveness as a low-risk investment vehicle.

From a regional perspective, North America continues to dominate the global term repurchase agreements market, accounting for the largest share due to its highly developed financial infrastructure and the presence of major institutional investors. Europe follows closely, supported by stringent regulatory standards and active participation by central banks. Meanwhile, the Asia Pacific region is witnessing the fastest growth, driven by the rapid expansion of financial markets in China, India, and Southeast Asia. Latin America and the Middle East & Africa, although still emerging, are showing increasing adoption of term repos as financial markets mature and regulatory frameworks evolve. This regional diversification is expected to further enhance the market’s resilience and growth potential in the coming years.

Type Analysis

The term repurchase agreements market is segmented by type into Overnight, Term, and Open repos. Overnight repos, which involve transactions