Skip to main content

Monetary Policy

(PDF PDF icon)

Since its February meeting, the Federal Open Market Committee (FOMC) has chosen to maintain the federal funds rate near and intended level of 5.25%. The funds rate (the interest rate banks pay on overnight loans to each other) is an anchor for other short-term rates. Between June 1995 and February 1996, the FOMC voted to lower the intended funds rate in three increments of 25 basis points each. The yield on one-year Treasuries fell about two percentage points from its January 1995 peak, while the yield on the three-month Treasury bill dropped to below 5%. That these yields had fallen below the overnight rate suggested an expectation of further funds-rate cuts.

Suggested citation: “Monetary Policy,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-09, pp. 02-04, 09.01.1996.

Upcoming EventsSEE ALL