![\"Fed](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-07-14-fed-excessreserves-wk.png?resize=525%2C349&ssl=1\" "\\"Fed")
<\/p>\nCommentators have highlighted the fact that bank excess reserves held on deposit at the Fed — and on which banks are paid interest at 0.25% p.a. — are declining. This would suggest that bank lending is rising, increasing inflationary pressure.<\/p>\n
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The Fed is well aware of the situation<\/p>\n
![\"Fed](\"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-07-14-fed-excessreserves.png?resize=525%2C349&ssl=1\" "\\"Fed")
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…and has responded to the recent slow-down by scaling back asset purchases (quantitative easing). They are likely to track the decline of excess reserves to ensure that the impact on the working monetary base (monetary base minus excess reserves) is contained — along with inflationary pressures.<\/p>\n","protected":false},"excerpt":{"rendered":"
Commentators have highlighted the fact that bank excess reserves held on deposit at the Fed — and on which banks are paid interest at 0.25% p.a. — are declining. This would suggest that bank lending is rising, increasing inflationary pressure. The Fed is well aware of the situation …and has responded to the recent slow-down … <\/p>\n