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Exchange Rates and Interest Rates

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Since the end of 1995, the difference between long and short-term interest rates has been widening in the U.S., Japan, Germany, and the U.K., possibly because short-term rates are expected to rise in all these countries. Higher short-term rates could result from stronger real economic activity or from a general tightening of monetary policy.

Suggested citation: “Exchange Rates and Interest Rates,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-04, pp. 19, 04.01.1996.

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