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Interpreting Federal Reserve policy is hard enough, but the central bank may need to dust off its how-to guide to explain the nuts and bolts of new tools it will use when it finally starts to raise interest rates.With $2.5 trillion in reserves, the Fed's ability to control that rate is much harder.If successful, the combination of all three, along with how the Fed controls the fed funds rate, will usher in a new policy regime instead of the ultra-loose one it has clung to for the past five years.The daily fed funds rate has averaged anywhere from 0.06 percent to 0.25 percent since January 2009, Fed data show.The Fed previously raised the overnight fed funds rate market by borrowing anywhere from $2 billion to $4 billion daily from top-tier Wall Street firms.The IOER, which is currently at 0.25 percent, offers banks income on excess reserves held at the Fed.
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