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Article: The rationality of federal funds rate expectations: evidence from a survey.
- Article from:
- Journal of Money, Credit & Banking
- Article date:
- August 1, 1989
- Author:
CopyrightCOPYRIGHT 1989 Ohio State University Press. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The Rationality of Federal Funds Rate Expectations: Evidence from a Survey
Federal Reserve policy is reflected most prominently and immediately in the federal funds market, which, as the core of the overnight money market, anchors other interest rates. Under the current borrowed reserves operating regime, the federal funds rate is a key indicator of the stance of monetary policy. Through term structure effects, expected federal funds rate changes affect the short-end of the Treasury bill yield curve (Simon 1989). Few studies have examined expectations in the federal funds market, despite its central importance.(1) This paper examines the rationality of short-term ...