Interest rate movements for 1987 show two periods that were turbulent for both financial markets and the Federal Reserve. In both the spring and fall, market-determined rates, such as those for 30-year U.S. government bonds, rose as market participants became more worried about future inflation, and perhaps, by the need for the Federal Reserve to tighten monetary policy to provide support for the dollar in foreign exchange markets. On both occasions, the Fed, first under the chairmanship of Paul A. Volcker and later under that of Alan Greenspan, responded by tightening policy in ways that raised short-term interest rates, including the key federal funds rate, which financial institutions charge when they lend reserves-cash-to one another. In early September, the Fed also increased its discount rate, the rate it charges when it lends money directly to financial institutions. After the big drop in stock prices in mid-October, the Fed pumped more money into the banking system to calm fearful financial markets, knocking down the federal funds rate. Long-term bond rates also went down as concern about future inflation eased. The Fed was also seen by market participants as less likely to raise interest rates again soon both because of the expectation of less inflation and the Reagan administration's dropping of an international agreement to defend the value of the dollar.