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The Federal Reserve is about to make an interest rate decision next week on the Fed Funds Rate. The Federal Reserve sets the Fed Funds
The Federal Reserve is about to make an interest rate decision next week on the Fed Funds Rate. The
Federal Reserve sets the Fed Funds rate and maintains a target between an upper and lower bound.
Since July this target rate has been to The Fed is expected to start lowering rates in
the coming months at its meetings every weeks.
Consider the following:
Scenario : the Fed lowers the Fed Funds rate by basis points at each of the next four
meetings, the Fed funds rate would be as follows using the middle of their target range:
Under steady bp cuts
for weeks until Sep meeting week
for weeks from Sep until end Oct weeks
for weeks end Oct until midDec weeks
for weeks mid Dec to end Jan weeks meeting not actually set for
Using Unbiased Expectations Theory and the reported yield on a Tbill maturing at the end of Jan
explain whether the market "expects" a point or a point cut, given on September
the yield on a treasury maturing on is
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