Money and Financial Markets
Many interest rates have fallen to their lowest levels in 30 years (except for a brief period in 1998 after the Asian financial crises and the Russian default). The benchmark effective federal funds rate averaged just 2.49% in October. After the Federal Open Market Committee’s November 6 decision to cut the intended federal funds rate 50 basis points (bp) to 2%, the fed funds rate fell even further, averaging just 2.01% for the week ending November 21. Likewise, financing costs for both individuals and corporations have dropped: The average 30-year conventional mortgage rate was 6.62% in October, and the Aaa-rated corporate bond yield dropped to 7.03%. In November, despite a rate cut, the 30-year mortgage rate and Aaa yield moved upward, averaging 6.75% and 7.16% for the week ending November 21.
Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-12, pp. 05-07, 12.01.2001.