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Will Interest Rates Remain Elevated Even as Monetary Policy Normalizes?, No. 24-28

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Will Interest Rates Remain Elevated Even as Monetary Policy Normalizes?, No. 24-28

DATE: August 2024

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Long-term bond yields indicate an increase in long-run r* of between 1.2 and 1.4 percentage points relative to its pre-pandemic level. This increase in r* is compatible with underlying economic shifts following the pandemic, including a reduction in personal savings by U.S. households. Evidence suggests that, even as inflation returns to trend and monetary policy normalizes, policy rates may remain above their prepandemic level.

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Federal Reserve Bank of Richmond. "Will Interest Rates Remain Elevated Even as Monetary Policy Normalizes?, No. 24-28" in Economic Brief (August 2024). https://fraser.stlouisfed.org/title/6034/item/674268, accessed on November 30, 2024.

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