When I posted last week about monetary economist Bill Poole’s incorrect claim that the Fed Reserve sets the Federal Funds rate, a number of commenters objected that my claim was trivial. Most argued that Poole’s usage was close enough to being correct because the Fed can so accurately hit its target.

My good friend and monetary economist Jeff Hummel has sent me the graph below. He writes:

The solid blue line is the Fed funds target for the period covered; the asterisks are the effective Fed funds rate for each day; but that is only a weighted average of all Fed funds transactions for the day, the dispersion of which is shown by the vertical black lines. And this is when the Fed is doing a good job of hitting its target.


Update: William Luther comments.