The Fed plans to keep pumping cash

[BmorePat87]

Not really my level of expertise, but essentially the Fed responded to a hike in short term lending rates by increasing the money supply, a move that typically leads to a decrease in interest rates. It’s cheaper to borrow when there’s more to lend.

We have target levels for interest rates that we want to stay at to ensure that inflation is manageable during economic expansions. The Fed’s role right now is to ensure that the economy remains healthy and interest rates don’t fluctuate too much. This move seeks to help stabilize things.

The Fed is saying that they expect this to be necessarily up to April when banks will be cashing a lot of tax checks. From there, the Fed will likely focus on buying back bonds as a means of increasing the money supply.

One concern with the temporary cash influxes is the cash tends to turn into investments, decreasing liquidity and making it hard to pay back without dipping too much into reserves.