Long-term interest rates reveal market confidence in central bank policies.
The article discusses how central banks use the term structure of interest rates to make monetary policy decisions. It explains that the yield curve shows the relationship between short-term and long-term interest rates, which can indicate market expectations about inflation and economic growth. The researchers explore different theories on how to interpret the yield curve and its implications for monetary policy. They highlight the importance of considering various economic factors when using the term structure to guide policy decisions.