Explore BrainMass
Share

Federal Reserve activity

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

In late June the Fed lowered its federal funds rate target from 1.25% to 1%. However between mid June and early August the yield on longer term 10 year Treasury notes rose from 3.1% to over 4.3%. This shows that Federal Reserve activity is irrelevant to the behavior of long term interest rates"

Agree or Disagree with the underlined portion of the above quote and explain your reasoning clearly. (If you agree, explain why Fed activity has no influence on long term rates...if you disagree, explain why longer term yields actually increased following the decline in the federal funds rate and what the increased difference between long term and short term rates signifies about investor expectations.)

© BrainMass Inc. brainmass.com October 24, 2018, 5:43 pm ad1c9bdddf
https://brainmass.com/economics/macroeconomics/federal-reserve-activity-19033

Solution Preview

Federal funds rate target
<br>-------------------------
<br>
<br>I disagree. Normally a low rate of Fed funds will keep the longer term 10 year Treasury rate to be also low. ...

Solution Summary

Federal Reserve activity is emphasized.

$2.19
See Also This Related BrainMass Solution

Describe the Federal Reserve's assessment of the current economic activity & markets

Describe the Federal Reserve's assessment of the current economic activity and financial markets.

View Full Posting Details