Will Interest Rates Remain Elevated Even as Monetary Policy Normalizes?

Felipe Schwartzman

Richmond Fed Economic Brief, 2024, vol. 24, issue 28

Abstract: Long-term bond yields indicate an increase in long-run r* of between 1.2 and 1.4 percentage points relative to its pre-pandemic level. This increase in r* is compatible with underlying economic shifts following the pandemic, including a reduction in personal savings by U.S. households. Evidence suggests that, even as inflation returns to trend and monetary policy normalizes, policy rates may remain above their prepandemic level.

Keywords: interest rates; inflation; r*; monetary policy (search for similar items in EconPapers)
Date: 2024
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