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rate decrease?

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Bychuck

L1: rate decrease? How does the fed funds rate effect the midterm rate used by the IRS? If the fed lowers interest rates, does this result in an immediate reduction of the midterm rate, or does it lag behind the fed funds rate? I plan on retireing in October at age 50 and will start taking 72tdistributions in December. I guess I”m a liitle nervous that the fed may start cutting rates this fall. Great website, I really enjoy it…lots of knowledge. Thanks.2007-08-22 13:36, By: chuck, IP: [69.19.14.17]
L2: rate decrease?Probably doesn”t – from interest rates, select Treasury Trends and watch the 3, 5 & 7 year rates.2007-08-22 13:55, By: Gfw, IP: [24.148.16.150]

L2: rate decrease?Hello chuck:
What the Federal Reserve does with discount rates has nothing to do with the setting of the Applicable Federal Rates. Instead, the U S Treasury measures the actual trading prices / yields of U S debt instruments in the market place and developes a monthly smoothed yield curve from 30 days to 30 years. Then, the mid-term AFR (which is of interest to us) is set at the 7 year mark on the yield curve. The measurement period is usually from mid-month to mid-month; e.g to set the September rate the measurement period is really July 15th to August 15th and then the September rate is usually published around August 25th giving Treasury 10 days or so to do the math. As a result, the published AFRs are really lagging rates on average by 30 – 45 days.
TheBadger
wjstecker@wispertel.net
2007-08-23 05:46, By: TheBadger, IP: [72.42.67.12]

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