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Federal Reserve Bank of Cleveland
Economic Commentary
Why haven't long-term interest rates fallen?
David E. Altig
Ed Nosal

In 2001, the Federal Reserve lowered the federal funds rate target more than it had in over 25 years, but long-term interest rates didn't budge. Has monetary policy become ineffective? Just the opposite, the authors argue. The stability of long-term rates shows that people don't expect inflation to rise. That confidence, especially in light of the dramatic shocks the economy experienced, attests to the success of the central bank's policies.

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David E. Altig & Ed Nosal, "Why haven't long-term interest rates fallen?" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Jan, 2002.
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Keywords: Interest rates ; Federal funds rate
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