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Money and Financial Markets

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In his February 16 testimony before Congress, Federal Reserve Chairman Greenspan discussed these yield curve movements. Changes at the long end of the nominal yield curve can be attributed to one or both of two causes: changes in real rates and changes in inflation expectations. Treasury inflation-protected securities (TIPS), which provide one measure of a real interest rate, indicate that long-term real interest rates have fallen about 50 bp since June. Since the real rate’s decline matches that of the nominal rate, TIPS imply that long-term inflation expectations are generally flat.


Suggested citation: “Money and Financial Markets,” Federal Reserve Bank of Cleveland, Economic Trends, no. 05-03, pp. 06-07, 03.01.2005.

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