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Money and Financial Markets

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Market participants’ inference that the FOMC has leeway to be patient is consistently reflected throughout the term structure of interest rates. Very short-term instruments, such as the three-month Treasury bill, have not budged from near 1% over the past year. The one-year and two-year bills declined very modestly in recent months after rising last summer. They remain very low by historical standards, suggesting the market’s expectation that if tightening were to begin this year, it would occur later and in small increments.

Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-04, pp. 05-07, 04.01.2004.

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