The Information Content of Discount Rate Announcements and Their Effect on Market Interest Rates

Timothy Cook and Thomas Hahn

Journal of Money, Credit and Banking, 1988, vol. 20, issue 2, 167-80

Abstract: This paper presents evidence that throughout the 1973-85 period the Federal Reserve systematically used certain types of discount rate a nnouncements to signal changes in its policy instrument, the federal funds rate. Market participants understood the signals contained in d iscount rate announcements and used them to revise their expectations of the funds rate. These revisions in funds rate expectations caused movements in Treasury bill rates. Copyright 1988 by Ohio State University Press.

Date: 1988
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