Cracking the conundrum

From 2004 to 2006, the FOMC raised the target federal funds rate by 4.25 percentage points, yet long-maturity yields and forward rates fell. We consider several possible explanations for this "conundrum." The most likely, in our view, is a fall in the term premium, probably associated with some combination of diminished macroeconomic uncertainty and financial market volatility, more predictable monetary policy, and the state of the business cycle.

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Year of publication:	2007
Authors:	Backus, David ; Wright, Jonathan H.
Institutions:	Federal Reserve Board (Board of Governors of the Federal Reserve System)
Subject:	Monetary policy \| Interest rates

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Extent:	text/html application/pdf
Series:	Finance and Economics Discussion Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2007-46
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005513067