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To: sourcery
Interest rates are a function of a) inflationay expectations, b) perceived credit risk, and c) the supply of lendable capital relative to demand.

Interest rates track exceedingly well to actual inflation alone. Expectations have a minor, short-term effect, offset by reality in the medium term (months). Examples of inflation correlating extremely well with inflation alone are Japan and Brazil. As to available capital, here in the US, it's the Fed's job to ensure there is adequate liquidity (capital), which they do pretty well, all things considered.

49 posted on 10/18/2003 6:52:07 PM PDT by Phaedrus
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To: Phaedrus
Interest rate components

Valuatations and Interest Rates

Treasury Sec. John Snow: US interest rates 'to rise soon'

57 posted on 10/19/2003 6:58:49 PM PDT by sourcery (Moderator bites can be very nasty!)
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To: Phaedrus
What Determines Interest Rates by the Federal Reserve Bank of Chicago.
58 posted on 10/19/2003 7:07:37 PM PDT by sourcery (Moderator bites can be very nasty!)
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