New Study Reveals Impact of Federal Funds Rate on Treasury Bill Rate
The article explores how the federal funds rate and the 3-month Treasury bill rate in the U.S. money market are related. By analyzing data from 1974 to 1999, the researchers found a stable connection between these rates, with most adjustments happening through the federal funds rate. They also discovered significant asymmetries and nonlinearities in interest rate dynamics, challenging traditional views on interest rate behavior.