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The Information Content of Discount Rate Announcements and Their Effect on Market Interest Rates

Year: 1988

Type: article

Abstract: This paper presents evidence that throughout the 1973-85 period the Federal Reserve systematically used certain types of discount rate announcements to signal changes in its policy instrument, the Federal funds rate. Market participants understood the signals contained in discount rate announcements and used them to revise their expectations of the future path of the funds rate. These revisions in funds rate expectations caused movements in Treasury bill rates. The paper also presents evidence that discount rate announcements signaling changes in the funds rate had a strong effect on bond rates in the period since October 1979.

Source: Journal of money credit and banking

DOI: 10.2307/1992108

Authors: Timothy Cook, Thomas Hahn

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1972257924

FWCI: 3.053

Cites:

Cited by: 116

Related to: 10