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MNI BRIEF: Fed's Clarida Surprised By Size of Drop in Yields

(MNI) WASHINGTON

Federal Reserve Vice Chair Richard Clarida said Wednesday he has been surprised by the drop in bond yields, adding the decline may reflect a more resilient virus and a lower neutral rate.

"I have been surprised, certainly by the magnitude of the decline in bond yields," he said in remarks at the Peterson Institute, and agreeing that there are numerous factors at play. "I think it is global. In part, it probably does reflect some concerns about the virus that may be more prevalent now than they would have been in the spring."

One ex-Fed researcher has told MNI that even a small rise in the U.S. neutral interest rate in the years ahead would be unlikely to be enough to prevent the central bank from having to return to zero nominal rates in future downturns.

MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com

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