What kind of interest rate does forward guidance affect?
A)the federal funds rate
B)the discount rate on loans from the Federal Reserve's window
C)interest rates on overnight loans
D)longer-term interest rates

Question

Quizplus · Accepted Answer

Forward guidance generally affects longer-term interest rates. It is a tool used by central banks to communicate their future monetary policy stance, which can impact market expectations of inflation and economic growth, and thus influence longer-term interest rates, such as those on treasury bonds or mortgages.

What Kind of Interest Rate Does Forward Guidance Affect