S
ST6_aspirant
Member
Why does selling T Bills increase the short term interest rates?
Solution 20.5
Why selling Treasury bills increases short-term interest rates
To sell more Treasury bills the central bank needs to reduce their price. This increase in their “discount” corresponds to a rise in one of the measures of short term interest rates. Rates on other money market instruments will move broadly in line.
The words highlighted bold and underlined mean "yield on the treasury bill, which is one of the measures of short term interest rates".
Am I right?
Solution 20.5
Why selling Treasury bills increases short-term interest rates
To sell more Treasury bills the central bank needs to reduce their price. This increase in their “discount” corresponds to a rise in one of the measures of short term interest rates. Rates on other money market instruments will move broadly in line.
The words highlighted bold and underlined mean "yield on the treasury bill, which is one of the measures of short term interest rates".
Am I right?
