Go to the Federal Reserve Bank of San Francisco’s Website to read the article titled “What Moves the Interest Rate Term Structure?” dated November 7, 2011, located at http://www.frbsf.org/publications/economics/letter/2011/el2011-34.html.
Next, watch the YouTube video titled “What does the Federal Reserve Bank do?” (1 min 45 s) dated July 23, 2009, located at http://www.youtube.com/watch?v=zInPquYgp2w. Be prepared to discuss.
Create an argument on whether the yield rate or the forward interest rate has the greater impact on interest rates in the U. S. Analyze the current economic forecasts by the Federal Reserve, economists, and financial experts.
What might be the impact of the forecasts on the interest rate term structure? Speculate as to how the economy would function without the Federal Reserve’s services, including the effect on the term rate structure, if any.