Hi,

Just want to ask if there is a risk of setting the cash free interest rate (Federal Funds Rate) too high. The one I would think of is the high risk free rate would reflect a tight monetary policy and discourage business development (borrowings). And if the central bank have been increasing the risk free rate, to what extent the central bank would consider to slow down the increase of the risk free rate?

The scenario is, the decrease of unemployment rate starts to be flattened out;

The increase in retail sales accelerates;

The increase in inflation remains constant;

Deposit sharply increase;

The decrease of loan starts to be flattened out.

Yield curve of the market continues growing in a constant rate.

Will the risk free interest rate grow next period? By how much (more or less than the current growth rate)?

Cheers.