The economy grew steadily through 17 interest rate hikes, arguing that it may turn out to be sensitive to the level of interest rates but was not very sensitive to rate hikes from low levels.
The comparison with America aside, the absolute level of interest rates has fallen to unprecedented levels.
The level of interest rates compared to that of our trading partners is about all that is mentioned.
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If Asians are abandoning their traditional thrifty habits, one reason is the record low level of interest rates.
If so, the eventual level of interest rates will depend on how much help the Bank gets from other anti-inflationary forces.
The nice thing about I Bonds is that, unlike market-traded bonds, your principal is absolutely steady--it does not fluctuate with the level of interest rates.
More likely, the dollar, the Fed and its new chairman have deep reservoirs of market confidence and respect, just not at this level of interest rates.
But the ability to repay debt depends not only on the level of interest rates, but also, crucially, on the rate of growth in future incomes.
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The market would set the appropriate level of interest rates for the economy and would automatically rebalance itself in the event of a problem in the financial system.
Given the record low level of interest rates already, I would prefer to see private businesses take the lead in economic recovery efforts as opposed to the federal government.
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It has given itself no flexibility to cope with occasions when economic weakness might justify a lower level of interest rates than is compatible with meeting the inflation target.
The problem with the latest move from Fed Chairman Ben Bernanke is that the level of interest rates is not the problem in the housing market or the U.S. economy.
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However, at the lower end of the market the main impediment to buying a home is not the level of interest rates but the requirement to pay a deposit, typically 20% of the purchase price.
The first is that consumers (and companies) are encouraged to borrow, not save, thanks to the low level of interest rates and a belief that central banks and governments will always rescue them if things go wrong.
The stimulation would be provided through further doses of quantitative easing as lowering interest rates further is a tool that has now pretty much been taken away from the Fed given the historic low level of interest rates today.
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It seems to be evaluating past monetary policy in terms of the change in nominal rates (which rose in 2004 and 2005) rather than the level of real interest rates (which was low from 2002 through the first part of 2006).
The answer to this enduring puzzle may lie in the level of real interest rates.
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The bottom line: PE should be seen in relation to the level and the direction of interest rates rather than in relation to its historical level.
Banks respond to the level and slope of interest rates in different ways.
The Fed is guessing at what the right level of short-term interest rates is.
Moreover, as noted below, the precise level of long-term interest rates is not the main constraint on borrowing here.
Unfortunately, Fed Chairman Ben Bernanke and most other central bankers still try to steer monetary policy by guessing the appropriate level of short-term interest rates.
The truth is the main drivers for the price of gold are the level and direction of real interest rates and the intrinsic value of the dollar.
Spain 10-year bond yields on Thursday rose to their highest level since 1997, with interest rates rising 1.5 points above the average paid at similar auctions this year.
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Tobias Adrian and Hyun Song Shin have shown that the balance sheets of financial firms that mark their assets to market grow and shrink based on changes to the level of short-term interest rates.
Under normal circumstances, interest rates would adjust to the level of inflation, but given the persistently soft economic conditions of the past few years, interest rates have remained low in spite of inflation.
The key difference is that interest rates in America are now down to 1.25%, the lowest level for more than 40 years, whereas European interest rates are 2.5%, giving the ECB more scope.
And we're not going to be able to hold these interest rates at this level.
For example, by keeping short-term interest rates below the level of inflation, a government can pay off its bondholders with cheapening money.
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