Long Term Perspective
The yield on the 3-month Treasury bill is typically lower than the federal funds rate. In the 1980s, the 3- month bill averaged 49 basis points less than the funds rate, but in the 1990s this average fell to 18 basis points.

The spread between the 3-month Treasury bill and the federal funds rate averaged -13 basis points between 2000 and 2005. This means that the 3-month bill yield was typically 13 basis points lower than the federal funds rate.

Short Term Perspective
The gap between the 3-month bill and the fed funds target has remained roughly unchanged for the past two years. In August, the average yield on 3-month bills rose 1 basis point from the June average to 5.09 percent.