Government debt raising aided by low interest rates, says BIS
GOVERNMENTS can continue raising long-term debt in the knowledge that central banks’ monetary policy will keep short-term yields anchored at low levels, according to a Bank for International Settlements (BIS) study.
Central banks and treasuries have forged closer working relationships since the financial crisis erupted almost two years ago and will continue to maintain these ties, to the ultimate benefit of the national governments, the BIS said.
“For now, treasuries can issue long-term debt with interest rates tied to short-term bill rates in the confidence that monetary policy will keep bill yields low,” the report on the BIS study said.
“In doing so, treasuries stand to benefit from interest cost savings as long as short-term rates remain low.”