The term structure of interest rates serves both as a vital link in the transmission of monetary policy and as an indicator of inflation expectations. The term structure is used here in a new application to address the 'policy in the pipeline problem.' Likewise, a peso-problem interpretation involving inflation scares can resolve some anomalies in the term structure data. Nevertheless, pitfalls still remain in using the term structure for tactical purposes.
Amanda L. Kramer
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).