You are the managing director of a small local bank. The Fed announces that it is moving its federal funds rate target from $2\mathrm{.}25\%$ up to $3\mathrm{.}0\%.$

a$.$ The increase in the federal funds rate will the interest rates on the business lines of credit and personal loans you make.

What would have to happen for you to also change the interest rate you charge on longer$-$term loans such as mortgages or business loans?

b$.$ You would change long$-$term rates if

you believe the change in the federal funds rate will be temporary.

you do not believe the federal funds rate will actually change.

you believe the change in the federal funds rate will be long$-$lasting.