Suppose that bond traders expect an increase in the federal funds rate, but the FOMC surprises them

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Suppose that bond traders expect an increase in the federal funds rate, but the FOMC surprises them by keeping it constant. What happens to longer-term rates? Explain.

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Money Banking and Financial Markets

ISBN: 978-1429244091

2nd edition

Authors: Laurence M. Ball

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Question Posted: Dec 05, 2015 03:45 AM

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Suppose that bond traders expect an increase in the federal funds rate, but the FOMC surprises them

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The expectation of a higher federal funds rate is already built into ...View the full answer

Money Banking and Financial Markets

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