Time again for another underwhelming FOMC meeting.? As I said before the last FOMC meeting, in The Fed Funds Target Rate is an Exercise in Futility, we are so close to the zero bound that further easing will do little.? Here’s a graph of effective Fed funds:

That is not to say that the Fed is out of options, but the FOMC and what it has to say, matters less and less.? The various lending programs of the Fed are where the action is, where they monopolize liquidity for the markets they deem worthy of service, while starving everything else of liquidity.

As others have commented, and I can’t remember where, the low Fed funds rate reduces the powers of the regional Federal Reserve banks, and raises the power of the NY Fed and the Board of Governors, because the regional Federal Reserve banks don’t have much play in the new lending programs.

The low fed funds rate affects high credit quality money market funds, many of which will close to new investments (and/or reduce fees).? Otherwise, the low rates may cause them to “break the buck.”? As it is, rates will be near the zero bound for a long-ish time, unless we get a spate of inflation due to dollar depreciation.

I’ll be back with a redacted version of the FOMC Statement after it is issued.