Fed's Poole on the term structure of interest rate

In the speech 'Understanding the term structure of interest rates' given on 14 June, William Poole of the Federal Reserve Bank of St. Louis said long-term interest rates have stayed steady in the face of rising short-term rates because the economy, and Fed policy, have evolved as expected.
In the speech 'Understanding the term structure of interest rates' given on 14 June, William Poole of the Federal Reserve Bank of St. Louis said long-term interest rates have stayed steady in the face of rising short-term rates because the economy, and Fed policy, have evolved as expected.

Poole said "distant" inflation expectations, which often affect long-term borrowing costs, have not changed dramatically in the past year.

"While certain data releases did surprise the market, over the period as a whole, the data came in about as expected, contributing to the absence of a trend in the bond rate over the period at issue," Poole said in remarks to the Money Marketeers in New York.

"Likely policy responses to economic data were also known in advance, and in the absence of economic surprises, FOMC (Federal Open Market Committee) decisions on the funds rate were much as expected," he added.

Saying the situation was "unusual but far from unprecedented," Poole said if growth or prices were to depart dramatically from expectations, then bond yields would start to exhibit "a persistent trend."

To read past central bank speeches use our Speech Finder. Click the link on the right.

Speech by William Poole, President, Federal Reserve Bank of St. Louis, Money Marketeers, The Down Town Association, New York, NY, 14 June 2005.

Click here to read the speech "Understanding the term structure of interest rates" on the Federal Reserve Bank of St. Louis's website

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