Trends in Federal Funds Rate Volatility
7 Pages Posted: 16 Aug 2005
Abstract
The behavior of the fed funds rate - a key monetary policy target and a benchmark for short-term interest rates - is closely watched by many market participants. After a decade marked by periodic bouts of high volatility in the funds rate, volatility has declined sharply since 2001. An analysis of the major factors influencing the rate's behavior shows that some of the forces behind the current fall in volatility first emerged in response to the earlier increases.
Keywords: Federal Funds, open market operations
JEL Classification: E58
Suggested Citation: Suggested Citation
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