Central bank interventions predict biweekly interest rate volatility in the U.S. market.
The article examines how the Federal Reserve's actions affect the volatility of the federal funds interest rate. By creating a model of the interbank money market, the researchers found that changes in target rates and intervention procedures impact the rate's volatility. The study suggests that the Federal Reserve's actions in 1994 influenced the interest rate's behavior in the U.S. market.