Friday, March 1, 2013

Bill McBride — Bernanke: How are long-term rates likely to evolve over coming years?

Bernanke: "...it is useful to decompose longer-term yields into three components: one reflecting expected inflation over the term of the security; another capturing the expected path of short-term real, or inflation-adjusted, interest rates; and a residual component known as the term premium. Of course, none of these three components is observed directly, but there are standard ways of estimating them....
"If, as the FOMC anticipates, the economic recovery continues at a moderate pace, with unemployment slowly declining and inflation expectations remaining near 2 percent, then long-term interest rates would be expected to rise gradually toward more normal levels over the next several years."
Calculated Risk
Bernanke: How are long-term rates likely to evolve over coming years?
Bill McBride

1 comment:

Matt Franko said...

Looks like far be it for Bernanke to think that he himself has anything to do with this....

Rates just "evolve".... humans action doesnt have anything to do with this.... no one is in charge.... bond vigilantes in view... confidence fairy in view...

We have absolute dopes running things right now.