Global Interest Rate Predictions Prove Unreliable, Leading to Market Instability
The study looked at interest rate predictions from around the world and found that these forecasts were generally accurate. They also discovered that the way people predict future interest rates doesn't always follow logical patterns. The study showed that term premia, which are extra returns investors demand for holding long-term bonds, change over time. Simple models can predict these changes, but the volatility in term premia movements is also important in explaining these variations for many countries.