Money and Financial Markets
The federal funds rate directly affects only the reserve desks of banks and a few brokers and dealers; however, as a transmitter of Federal Reserve policy, it influences other rates of wider concern. Rates such as mortgages and corporate bonds have generally followed long-term Treasuries. The spread between mortgages and Treasuries has been virtually unchanged, barely rising from 161 bp to 164 bp over the past year. Corporate bonds have not risen quite so fast; their spread to Treasuries has dropped from 210 bp to 175 bp.
Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 05-11, pp. 05-07, 11.01.2005.