Year: 2007
Type: article
Abstract: 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.
Authors: David Backus, Jonathan H Wright
Language: English
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W3122428958