Neutral — Fed holds rates near r*. IORB anchors the ample floor; limited supply sits at center.
Neutral
FFR 2.25–2.50% · IORB 2.40%
Limited Reserves System
Pre-2008 · Fed moves supply via Open Market Operations (OMO)
Demand
Supply
Ceiling — discount rate
Ample Reserves System
Current (post-2008) · Fed moves IORB administratively
Demand (flat at IORB)
Supply
Ceiling — discount rate
Floor — ON RRP
Limited reserves (pre-2008)
Ample reserves (current)
Mechanism
OMO shifts supply curve left/right
Mechanism
IORB shifts demand flat section up/down
What moves?
Vertical supply line (S)
What moves?
Flat section of L-shaped demand (D)