Money Market Indicators

while control of the money supply and reserves are now the principal focus of central bank policy-making in the U.S., the Fed also keeps close watch on conditions in the nation‘s financial markets, especially the cost and availability of credit in the money market. Indeed, there is evidence that the Federal Open Market Committee also sets target levels or ranges for the interest rate on federal funds loans. One reason is tat the Fed is charged with the responsibility for stabilizing conditions in the financial markets to assure a smooth flow of funds from savers to investors. In addition, it must ensure that the government securities market functions smoothly so that adequate supplies of credit are available to dealers and the federal government can market its billions of dollars in debt securities without serious difficulty. This is a burdensome responsibility because the Treasury is in the market every week refunding and offering new bills, and both the Treasury and several federal agencies sell billions of dollars worth of notes and bonds each quarter of the year.