Dudley backs floor-based system for setting monetary policy

william-dudley
William Dudley

New York Fed chief William Dudley has recommended the Federal Reserve retain its reserves-abundant, floor-based method for setting the policy interest rate, even as the central bank returns to normal monetary policymaking.

Dudley said there was a “very compelling” case for retaining the floor system. In remarks on April 18, he said floors were less complicated to implement, and created fewer difficulties for conducting lender-of-last-resort operations.

In a floor-based system, the central bank

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