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1 posts from "August 2026"
August 4, 2026

A Window into Bond Investors’ Uncertainty About R‑Star

Guillaume Roussellet

Image of an interest rate sign with a magnifying glass hovering over it. Black and gray background with interest rates in gray on it.

Monetary policymakers closely monitor the term structure of sovereign bond yields to uncover market participants’ beliefs about the future monetary policy stance, inflation, and activity. A particular object of interest is the natural real rate of return, or “r-star,” which acts as a guide for monetary policy decisions. Numerous papers have questioned how much information investors possess, and how precisely they know r-star. In this post based on a recent Staff Report, we explore what the term structure of interest rates can teach us about r-star and its perception by investors.

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Posted at 7:00 am in Central Bank, Financial Markets, Inflation, Macroeconomics, Monetary Policy | Permalink | Comments (0)

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