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Powell Says Fed Monitors, But Doesn't Control, Slope of Yield Curve


Q: From MNI's Jean Yung: Some investors are expecting the yield curve could flatten or even invert after rate hikes begin, how important is that risk in the Fed's consideration for adjusting policy?

  • A: We do monitor the slope of the yield curve but we don't control the slope, many factors influence longer-term rates. We take it into account along with many other financial conditions. You've got a slope of 2s 10s I think that's 75 points, but that's will in the range of a normal slope so something we're monitoring.
  • I don't think of it as some kind of iron law but we doo try to understand the implications and what it's telling us.
  • Long-term sovereign debt is an important asset and the fact our rates are relatively high may put something of a ceiling on our rates, I don't know. But would depend on the facts and circumstances at that time.

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