The textbook I’m reading says that the reserve ratio is like the biggest “tool” that the fed has. They are increasing interest rates, but then they are having the reserve ratio at 0% and they are engaging in reverse repo to make sure that banks have plenty of cash. I don’t get it.
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You are mistaken about the reverse repo portion of this. 1. The Fed **takes** cash and supplies collateral, which is the opposite of what you are stating. 2. Banks don’t use the RRP, since they have the IORB (interest on reserve balances) which is 10 basis points higher. (You can look at historical data on the Fed RRP release page, for any date over 2 months ago and see that banks don’t use it https://imgur.com/a/ogTYAkS)
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