Question: Suppose the current federal funds rate is 4 percent and the Fed wants to lower it to be within the range of 2.00-2.25 percent.
(a) What will the Fed do - here in 2022 - to accomplish this objective?
(b) Next, explain how banks and nonbank financial institutions will react to what the Fed does?
(c) Finally, explain the process by which what the Fed does will end up lowering the federal funds rate to within the range of 2.00 - 2.25 percent.