Implied yields on federal funds futures provide market participants’ best estimate of future monetary policy. Current yields reveal that market participants continue to anticipate at least one more rate increase before the end of the year. After an upward adjustment in the weeks just prior to the Federal Open Market Committee’s (FOMC) decision to raise the federal funds rate on June 29, expectations of further increases began to wane. As of July 21, the December contract traded at 5.25%, which, although 25 basis points above the current target of 5.0%, was down from 5.5% one month earlier.
Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-08, pp. 02-03, 08.01.1999.