How the Fed can raise Fed rate without unwinding excess reserves
If inflation starts to rise or the economy overheat, how can the Federal Reserve raise their Fed rate? One might think it would be impossible with $4 trillion in reserves, but the Fed does have a way. They can simply raise the floor under the Fed rate. What is the floor? The interest on reserves.
If you raise the interest on reserves, banks will not lend below that rate. For example, if the interest on reserves was 1.5%, a bank would not lend at 1% with risk, when it could keep the money with the Fed and earn 1.5% interest. Effectively the Fed rate is raised by raising the interest on reserves.
Here is a quick video explaining this visually.
NO, if you raise the remuneration rate you either further induce dis-intermediation among the non-banks or incent stagflation.