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Money and Financial Markets

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The recent financial environment, in which the overnight real interest rate has been near zero, was initially associated with a general decline in interest rates across all maturities. The three-month Treasury bill still hovers near its longer-term low, but most other rates began to rise in early summer, after the Federal Open Market Committee surprised the market with a smaller-than-expected rate cut. The yield curve steepened sharply after the Committee’s June 25 policy statement, with long-term rates jumping around 100 basis points in the month following. Since then it has stabilized, backing off only slightly at the longer maturities.


Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 03-12, pp. 05-07, 12.01.2003.

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