Inflation and Rates

The Federal Reserve Bank of St. Louis has information available on interest rates and economic conditions. A publication called Monetary Trends contains graphs and tables with information about current conditions in the capital markets. Go to the website www.stls.frb.org and click on Economic Research on the menu at the top of the page. Find the most recent issue of Monetary Trends in the Recent Data Publications section and answer the following questions.

1. What is the professionals' consensus forecast for inflation for the next 2 years? (Use the Federal Reserve Bank of Philadelphia line on the graph to answer this).
2. What do consumers expect to happen to inflation over the next 2 years? (Use the University of Michigan line on the graph to answer this).
3. Have real interest rates increased, decreased, or remained the same over the last 2 years?
4. What has happened to short-term nominal interest rates, over the last 2 years?
5. What has happened to long-term nominal interest rates?
6. What are the most recently available levels of 3-month and 10-year yields on Treasury securities?

Analytics Tutorial

Go to http://gozips.uakron.edu/~drd/downloadtutorial.html. Review the step-by-step tutorial that provides instructions for downloading economic and financial data in a variety of file formats into Excel. Work through the example at the end of the tutorial. Later assignments in this text may ask you to download data, so learning how to access the data now will make later assignments more manageable. After you have finished the tutorial, click the link to the federalreserve.gov website and follow the link for weekly interest rate data. Click on the historical data,3-month Treasury Bills, secondary market links. Copy the monthly T-bill rates for the most recent five years into an Excel worksheet. Use the Data, Text to Columns menus to convert the data into a useable format. (Hint: the data are comma delimited.)