The authors are particularly grateful for helpful comments form the editor and two anonymous referees.
FINANCIAL MARKET RESPONSES TO MONETARY POLICY CHANGES IN THE 1990S
Version of Record online: 18 JUL 2008
Contemporary Economic Policy
Volume 19, Issue 3, pages 254–267, July 2001
How to Cite
Urich, T. and Wachtel, P. (2001), FINANCIAL MARKET RESPONSES TO MONETARY POLICY CHANGES IN THE 1990S. Contemporary Economic Policy, 19: 254–267. doi: 10.1093/cep/19.3.254
- Issue online: 18 JUL 2008
- Version of Record online: 18 JUL 2008
The operating target for monetary policy in the United States has changed from borrowings in the late 1980s to a target range for the fed funds rate to a specific fed funds target. In addition, secrecy about the policy target has largely disappeared, and since 1994 policy targets have been announced immediately. This article explores the impact of policy decisions on short-term interest rates as the policy announcements have changed. The authors find that the policy changes had a larger impact when the Fed moved to a specific emphasis on the fed funds rate. However, since the Fed began to announce the targets, policy changes have had a lesser effect on rates.