LIBERTY STREET ECONOMICS
Monetary Policy Transmission and the Size of the Money Market Fund Industry: An Update Gara Afonso, Marco Cipriani, Catherine Huang, Abduelwahab Hussein, and Gabriele La Spada
The size of the money market fund (MMF) industry co-moves with the monetary policy cycle. In this post, the authors update the findings of an earlier post that showed this co-movement is likely due to the stronger response of MMF yields to monetary policy tightening relative to bank deposit rates, combined with MMF shares and bank deposits being close substitutes from an investor's perspective. They also take a closer look at the current monetary policy tightening by the Federal Reserve. |
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