Government Bonds’ Shrinking Appeal Has Cost, New York Fed Says

A key interest rate is rising globally, and the chief culprit appears to be the declining appeal of government bonds for safety and liquidity, according to Federal Reserve Bank of New York researchers.

The so-called “natural rate of interest” — the short-term interest rate for an economy at full strength with stable inflation — has seen a “statistically significant rise” since 2019, climbing about a percentage point in the US and other advanced economies, New York Fed researchers Marco Del Negro, Elena Elbarmi and Michael Pham said in a blog post.

While there are other contributing factors, waning ...