Report
The term structure of interest rates and its role in monetary policy for the European Central Bank
Abstract: This paper examines the relationship of the term structure of interest rates to monetary policy instruments and to subsequent real activity and inflation in both Europe and the United States. The results show that monetary policy is an important determinant of the term structure spread, but is unlikely to be the only determinant. In addition, there is significant predictive power for both real activity and inflation. The yield curve is thus a simple and accurate measure that should be viewed as one piece of useful information which, along with other information, can be used to help guide European monetary policy.
Keywords: Interest rates; European Economic Community; Monetary policy; European Central Bank;
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Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Research Paper
Publication Date: 1995
Number: 9526