Policy Tensor

Rate Outlook and the Coming Fiscal Crisis

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Policy Tensor
May 22, 2025
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Almost exactly one year ago, I argued on these pages that the CBO’s rate assumptions were far out. I pointed out that the CBO was assuming that the effective rate on outstanding federal debt would converge to 3.6 percent in a decade, which was then at the very upper end of the long-term range of the FOMC members. How far have we come in a single year. N…

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