Does the Fed Control Interest Rates? - Eugeme F. Fama

Passing along this interesting paper from Eugene Fama at the University of Chicago.

Does the Fed Control Interest Rates?

From the article...

"In sum, the evidence says that Fed actions with respect to its target rate (TF) have little effect on long-term interest rates, and there is substantial uncertainty about the extent of Fed control of short-term rates. I think this conclusion is also implied by earlier work, but the problem typically goes unstated in the relevant studies, which generally interpret the evidence with a strong bias toward a powerful Fed.

"Finally, for the period that starts with the lingering recession of 2008, a less ambiguous conclusion is possible. The decline in short rates after 2008, despite massive injections of interest bearing short-term debt (reserves) by the Fed and other central banks even with respect to the short-term rates that are commonly taken to be their special preserve."

-Eugene Fama