The Governing Council is presented with data and analysis showing that the output gap has gone from nearly $0$ to large and negative. Additionally, inflation is $\backslash (1\mathrm{.}2\backslash \%\backslash )$ instead of the target rate, $2\backslash \%.$

a$.$ Using the operating band, the Governing Council is likely to influence interest rates by the interest rate it pays on excess reserves and its overnight borrowing from financial institutions.

b$.$ Additionally, the Governing Council is likely the overnight rate.