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Foreign Central Banks

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None of the major central banks has changed its policy setting since the Federal Open Market Committee raised its target to 1.5% on August 10. Most central banks implement monetary policy by targeting a short-term interest rate. The Federal Reserve uses the overnight interbank loan (“federal funds”) rate as its policy target. The daily average actual rate rarely deviates far from the target. Open market operations, which can be carried out daily, if necessary, appear to match the daily supply of and demand for bank reserves at the target rate.

Suggested citation: "Foreign Central Banks," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-09, pp. 18, 09.01.2004.

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