The long-term interest rate conundrum: not unraveled yet?

Tao Wu (twu@imf.org)

FRBSF Economic Letter, 2005, issue apr29

Abstract: In congressional testimony on February 16, 2005, Federal Reserve Chairman Greenspan characterized the recent behavior of long-term interest rates as a \\"conundrum.\\" Typically, long-term rates tend to rise as monetary policymakers raise short-term rates. But not in the current episode. Despite steady monetary tightening beginning in the middle of 2004, the yields on long-term U.S. Treasury securities actually have declined since then by about 50 basis points. As a consequence, the current level of long-term interest rates seems to be well below what one would expect on the basis of economic fundamentals.

Keywords: Federal Open Market Committee; Open market operations; Monetary policy; Government securities (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (13)

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