The 'conundrum' of long-term rates failing to rise when the Fed began raising short rates was likely because market participants were unsure whether the Fed was permanently abandoning the policies of the 80s and 90s, so much of the long-rate adjustment was a surprise.
causalpending
Speaker
John TaylorEvidence Quote
“my feeling about the conundrum is that the main reason for this was that people in the markets were somewhat unsure about what the Fed was going to do after all they were doing something very unusual in this period... so I think a lot of that longer-term rate adjustment was a surprise for that reason”
Created: 6/15/2026, 9:20:12 AM
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