Money and Financial Markets
At the short end of the maturity spectrum, interest rates tend to follow the federal funds rate closely. With the fed funds rate unchanged through much of 2002, the three-month Treasury bill held fairly steady. However, all short-term rates fell markedly when the fed funds rate was cut 50 basis points in November. Risk spreads in the commercial paper market barely increased during 2002 and remain low, probably because lower-quality issuers are exiting the market. The amount of commercial paper outstanding dropped nearly one-third in 2002 and continues to decline this year.
Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 03-03, pp. 06-07, 03.01.2003.