There is a question about when policy makers of the Federal Reserve System will raise interest rates. But before that question, it is important to know if the policy makers have figured out how to do that. And the answer is: they haven't quite figured it out.

Since 2008 financial crisis, the United States central bank has been trying to control near-term borrowing costs, but in that case, the central bank has faced troubles. While the bank's main new tool has enabled the Federal Reserve System to exert more influence over money-market rates in the last year, experts at investment banking companies like Barclays to Goldman Sachs said that the bank's program is too small to stop rates from falling.

According to reports, new schemes are required because the federal funds rate have ceased to be an effective means to encourage short-term market rates. James Camp, a fund manager at Eagle Asset Management in Florida, said, "The likelihood that we are going to get through this without some form of accident is very small. My concern is that the rate resetting higher is not very elegant and becomes sort of clumsy, with a series of fits and starts".

As per Camp, Fed requires to use its main tool, reverse-repo program, more than triple to roughly $US1 trillion from the current $US300 billion per day limit. In an overnight reverse repo, the Fed uses securities as collateral to take cash from counterparties. After that, the Fed returns the cash the next day to counterparties along with interest and gets the securities back.

Currently, officials of Fed are seeking the risk that the program could cause investors to avoid privately issued securities for the safety of Fed repos in times of turmoil.