This is in their long term self interest.

These policies did succeed in lowering long term interest rates.

Figure III. Outflows from profits and interest on long term

And its debt, you have long term debt with interest rates

Remarkably, as short term interest rates rose, medium and long term interest rates did not, something that was referred to as a conundrum.

Moreover, low long term interest rates are a thing of the past.

In short, QE lowering long term interest rates by buying long term bonds and mortgages won t do much to stimulate business directly.

QE2, in which the Fed bought long term government bonds, did not have a discernible effect on long term government interest rates.

Investors are buying long term bonds at the current low interest rates because the interest rate on short term investments is now close to zero.

Given today s exceptionally low long term interest rates, the annual cost would be, well, peanuts.

It would be in the long term interest of the permanent members to do so.

Inflation implies higher long term interest rates until markets regain confidence in the central bank.

Here, monetary authorities must be vigilant, and continue their non standard interventions managing both short term and long term interest rates.

Either way, a rise in long term interest rates is liable to choke off the recovery.

But, even after disinflation in the mid 1980 s, long term interest rates remained relatively high.

An expectation that interest rates will be high sometime in the next decade should mean high interest rates on long term bonds today.

The resulting increase in real long term interest rates will reduce all forms of interest sensitive spending, adding further to the economy s weakness.

Investors are buying long term bonds at the current low interest rates because the interest rate on short term investments is now close to zero. In other words, buyers are getting an additional 2 current yield in exchange for assuming the risk of holding long term bonds.

The US is not the only country with very low or negative real long term interest rates.

It also lowered long term interest rates in the US and made monetary conditions there more expansionary.

Given modest inflationary pressures, long term real interest rates rose but nevertheless remained close to historical lows.

Yet financial markets are not pricing dollar depreciation and a rise in long term US interest rates accordingly.

The traditional signals provided by inflation expectations, long term interest rates, and exchange rates have not started flashing.

NEW HAVEN Real long term interest rates that is, interest rates on inflation protected bonds have fallen to historic lows in much of the world.

Short Term Talk, Long Term Cost

CAMBRIDGE Long term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities.

The Fed has pursued its strategy of low long term interest rates in the hope of stimulating economic activity.

But not now given extraordinarily low long term interest rates, no serious economist raises the crowding out issue nowadays.

But China s long term interest, and that of the world, requires that it get serious about domestic structural reform.

Similarly, loans for economic development should be extended at a concessionary interest rate with a long term payback schedule.

Long term Recommendations

Long term impacts

The low interest rate on long term Treasury bonds has also boosted demand for other long term assets that promise higher yields, including equities, farm land, high yield corporate bonds, gold, and real estate.

Also, if exit occurs by selling the long term assets purchased during QE, a sharp increase in interest rates might choke off recovery, resulting in large financial losses for holders of long term bonds.

Similarly, the export lobby in China has no interest in a strong renminbi, even though it is in China s long term interest to let its currency appreciate.

One oft heard justification for high asset prices is that real (inflation adjusted) long term interest rates are very low.

Moreover, ECB chief economist Otmar Issing predicts long term interest rates would go up not down as inflationary expectations increased.

The objections coming from universities are more puzzling, as it is in their long term interest to conduct research ethically.

Ordinarily, rapid global growth translates into high long term interest rates that is, unless, deep down, people have become nervous.

The hope is that if investors consider this announcement credible, long term interest rates will come down further, encouraging spending.

The low interest rate on long term Treasury bonds has also boosted demand for other long term assets that promise higher yields, including equities, farm land, high yield corporate bonds, gold, and real estate. When interest rates rise, the prices of those assets will fall as well.

But what of the future? The recent rise in long term interest rates is just the beginning of an increase that will punish investors who are seeking extra yield by betting on long term bonds.

So what will happen when central banks start raising interest rates? In 1994, rising short term rates caused increases in long term rates and declines in long term bond prices that were at least double what standard models at the time were predicting.

(r) Long term contracts

Long term policy plans