At its June 2022 meeting, the US Federal Reserve surprised markets by raising its target interest rate
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At its June 2022 meeting, the US Federal Reserve surprised markets by raising its target interest rate by a greater-than-expected 75 bps and suggested further increases in the future in response to sharply higher inflation. Exhibit 11 shows one-year and two-year US Treasury strip prices per USD100 at the end of May 2022 and after the Fed’s decision in June:
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62 bps or 062 percent First we use Equation 18 to solve for each market discoun...View the full answer
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