Interest Rates Could Stay at Record Low Till 2012 - NYTimes.com

If my view of the way things are playing out on the global scene is correct, it will be several years before we see a significant increase in interest rates on either short or long maturity bonds.

Based on this article in today's New York Times, looks like at least the Fed's internal staff agrees.

Here's an excerpt:

And while a few Fed officials have argued that extraordinarily low interest rates could lead to new price bubbles, or excessive leverage and speculation by banks, Mr. Rudebusch argued that the relationship between short-term interest rates and financial imbalances was “quite erratic and poorly understood,” noting that Japan had very low interest rates for about 15 years without those problems.

In addition, Mr. Rudebusch said the federal funds rate was less central than in the past because the Fed has been buying mortgage bonds and Treasury securities to hold down long-term rates.

“Changes in long-term interest rates have much larger effects on the economy than equal-sized changes in short-term interest rates,” he wrote.

Interest Rates Could Stay at Record Low Till 2012 - NYTimes.com