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Economic Perspectives, Vol. 5, 2nd, No. 3, 1981
The discount rate—will it float?
Since the Federal Reserve adopted its new reserves-oriented operating procedure on October 6, 1979, the role of discount policy has come under greater scrutiny both inside and outside the System. Of special interest has been the spread between the federal funds rate and the discount rate. There is a strong positive association between the federal funds rate-discount rate spread and the amount of reserve adjustment borrowing from the Federal Reserve.
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