Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Everything the Fed thinks it knows may be wrong

VIDEO1:5601:56
Is the Fed wrong on interest rates?

At the core of the Federal Reserve's credibility is its insistence that it can hold interest rates low enough for long enough to ensure a complete economic recovery.

The reality may prove quite a bit different, particularly if current trends hold up.

Those low yields are critical for both the public and private sector—financing upwards of a trillion dollars a year in corporate borrowing as well as helping to contain financing costs for the government's $17.5 trillion debt.

But after nearly five months of a decline in yields that caught market participants almost completely off guard, talk is increasing that inflationary pressures are building and that yields may begin to rise in a way that could put the Fed behind the curve of market forces.