Since December 2008, the central bank has kept its short-term interest rate target at 0.00%-0.25%.
At a zero short-term interest rate, the central bank would have to work on adjusting longer-term rates.
Economists also expect the Federal Reserve to cut even further the short-term interest rate, now its lowest in decades.
As for France, its short-term interest rate is close to Germany's, at 3.4%.
To influence demand, the central banks move a short-term interest rate up or down by adjusting the supply of bank reserves.
It comes about because the Federal Reserve System, in its so far failed effort to stimulate the economy, has fixed the short-term interest rate at 0%.
Yields on Mexican short-term interest rate swaps were little changed after the minutes as investors stuck to bets that rates will remain on hold into 2014.
Then in September, the Fed cut its key short-term interest rate for the first time since 2003 by one-half percentage point from 5.25 percent to 4.75 percent.
The Fed has said it plans to keep its key short-term interest rate near zero at least until the unemployment rate dips below 6.5 percent from its current 7.6 percent.
The Federal Reserve's decision on September 29th to lower its main short-term interest rate by a quarter point is simply an injection of Vitamin B-12, meant to give a healthy economy a bit more vigour.
U.S. equity prices continue to rise as a benign short-term interest-rate policy holds sway.
Fewer than 700, 000 short-term interest-rate futures contracts traded on the Chicago Mercantile Exchange just six years ago.
But last month, when the French futures exchange, Matif, opened electronic markets alongside its pits, trading in short-term interest-rate contracts quickly migrated to the computers.
Some seniors have been burned by cards with a short-term low interest rate followed by a high interest rate, so be sure to read the fine print and know how long the rate will last.
These involve selling short-term December 1999 interest-rate futures contracts and buying September 1999 and March 2000 ones, on the assumption that short-term rates will spike over the millennium because of extra demand for cash.
In December, it exhausted its supply of conventional monetary ammunition when it lowered its short term-interest rate to between zero and 0.25%.
Eurobanking means one short-term-interest-rate policy for all.
The U.S. has swapped its relatively long-term expensive debts for short-term ones with a low interest rate.
That proportion has been climbing sharply in recent years, however, because short-term interest rates (and thus variable-rate mortgages, which follow them) have been so much lower than long-term rates (on which fixed-rate mortgages are based).
They might be investors who lent money to the bank by buying its short-term bonds, with a Libor-linked interest rate.
It works like this: the Fed buys long-term treasury bonds (which currently have a higher interest rate) rather than short-term ones.
They return about the same as long-term bonds with lower interest-rate risk and pay substantially better than short-term bonds.
Until the Great Recession, the Fed limited its purchases of Treasury paper to short-term bills that carry no interest rate risk.
Following two days of sell-offs in stock markets across the globe--and a week ahead of its Federal Open Market Committee meeting (when the rate cut was expected)-- the Fed slashed short-term interest rates by three-quarters of a percentage point, its single most dramatic rate reduction since 1984.
Short-term interest rates such as the overnight bank borrowing rate and one-month and one- year Treasury bill rates are already close to zero.
For example, the Goldman Sachs monetary-conditions index (based on a weighted average of short-and long-term interest rates and the trade-weighted exchange rate) suggests that America's monetary policy is currently at its tightest since 1989, largely reflecting the strong dollar.
Careful debt-management strategies that avoid short-term borrowing or the bunching of maturities and hedge against interest-rate or exchange-rate swings should come high on the agenda.
It should lend only to pre-certified countries facing temporary liquidity shocks, on a short-term basis, at a penal interest rate, and without economic conditions attached.
That is, the interest rate on Argentinean short-term paper, or the price of the peso on the forward market, reflects the risk of a surprise devaluation that will cost you a chunk of your capital.
Finally, realize that even in the current low interest rate environment, short-term, low-yield bonds offer the advantage of liquidity and little downside risk, allowing them to potentially play an important role in your portfolio.
FORBES: Buffett's Right, Bonds May Fall Victim To Inflation But Hold Them For Now
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