Greenspan: Divergence in Rates Less Puzzling

McConnel, Allison L.
March 2005
Bond Buyer;3/3/2005, Vol. 351 Issue 32082, p2
Trade Publication
The article reports that despite the recent gap between short-term and long-term rates the U.S. Federal Reserve Board chairman Alan Greenspan said yesterday it was "very evident" the economy wasn't beading toward a slowdown. Responding to questions from members of the U.S. House Committee on the Budget after delivering prepared testimony, Greenspan said the divergence was "less of a conundrum" than it was when he testified earlier this year. Historically, Greenspan said, a decrease in short-term rates does move long-term rates downward because the inflationary premium embodied in long-term rates decreases. Greenspan dismissed a comparison to long-term rate performance in the 2001 economic downturn.


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