In late November and early December 2006, there was speculation in the financial markets as to what

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In late November and early December 2006, there was speculation in the financial markets as to what the Federal Reserve planned to do with interest rates. After raising the federal funds interest rate 17 consecutive times and then keeping it constant for three months, the question was whether the Fed would begin raising this interest rate again or perhaps even lower it. On Tuesday, December 12, the Federal Reserve Open Market Committee met and announced that it was going to keep the federal funds interest rate at 5.25 percent. By late Tuesday afternoon, the prices of all maturities of Treasury securities had increased.

What happened to interest rates on Treasury bonds after the Federal Reserve’s interest rate announcement? 

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