Why Interest Rates Are Down Despite the Taper

The Fed's taper is supposed to raise interest rates, right? So why are they down?

David Hanson
David Hanson and Matt Koppenheffer
Apr 1, 2014 at 8:18AM

Much of the thesis for the market's reaction to the moves of the Fed recently has been based on the idea that once the Fed's quantitative easing program begins tapering off, the historically low interest rates that have created the current interest rate environment will begin to rise. But is that actually what history predicts would happen?

In this segment from Monday's Where the Money Is, Motley Fool financial analysts Matt Koppenheffer and David Hanson take a look interest rates, why they are currently falling, and what the history books have to say on the subject. David also looks at the issue from a chicken-and-egg perspective, asking whether the movement of interest rates is the result of the Fed's actions, or the cause.