Implied yields on federal funds futures often are used to gauge market participants’ expectations of the future course of monetary policy. Activity in this market has increased in 2001, with average daily trading volume nearly 200 percent higher than last year. Implied yields had stabilized for much of October, but fell about 25 basis points (bp) across maturities in the latter half of the month. Market participants expect at least a 25 bp rate cut at the November meeting, and most expect the rate to drop 50 bp by year’s end.
Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-11, pp. 04, 11.01.2001.