Economic Quarterly

1995

 

Summer 1995

Some Key Empirical Determinants of Short-Term Nominal Interest Rates

Yash P. Mehra

Inflation is the main determinant of the stochastic component of short-term nominal interest rates. The Federal Reserve can, therefore, permanently lower short rates only by reducing inflation. In the short run, the behavior of nominal rates is determined primarily by the outlook for inflation, by Fed policy, and by the state of the economy. Several customary fiscal policy measures do not affect the short rate in the short run.



Contact Us

Richmond

Amanda L. Kramer
(804) 697-8606

Publications image
Get Our Free Publications

To receive a notification by email when Economic Quarterly is posted online or to order single copies of past issues, click on the links below (published online only since 2012).