Description

This document discusses recent trends in long-term interest rates in advanced economies. We argue that expectations of future short-term rates, as well as the term premium required by investors for holding long-term bonds, seem to be important for explaining the historically low levels of interest rates observed after the subprime crisis. We also discuss what the future might bring in terms of interest rate normalization, including some of the risks involved in the process. Finally, we present evidence about the link between interest rates in Chile and the United States, and analyze its implications for monetary policy.