Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
How the Fed Actually Sets Interest Rates
In this episode, Lucas and Luna drill into the mechanics of how the Federal Reserve sets its benchmark interest rate — the federal funds rate — and why it matters for your wallet. They walk through the Fed's two main policy tools: interest on reserve balances (IOER) and the overnight reverse repurchase agreement (ON RRP) facility. Lucas explains why the Fed now targets a range rather than a single number, and how the overnight repo market briefly broke in 2019, forcing the Fed to create a standing repo facility. By May 2026, the fed funds rate sits at 4.00%-4.25%, and the hosts explore…
The skinny
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