Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Care About Term Premia
In this episode of Monetary Policy Explained, Lucas and Luna unpack the term premium — the extra yield investors demand for holding long-term bonds instead of rolling short-term ones. They walk through how the term premium affects mortgage rates, corporate borrowing, and the transmission of monetary policy, and why central banks watch it as a signal of market confidence. Using the ten-year Treasury as their anchor, they explain what widening or narrowing term premia mean for the economy, drawing on the post-2022 era of quantitative tightening and elevated rate volatility. Lucas brings a…
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