The Idolatry of Interest Rates - James Montier


Structured Learning

Date: 03 December 2015

CPD Hours: 1 hour 15 minutes

It seems one can hardly open a financial newspaper or read a blog these days without tripping over some academic-cum-central banker talking about the once arcane notion of the equilibrium real interest rate. Without a natural rate, it isn’t obvious what cash rate one should expect to see in the long term If there isn’t a natural rate, then we are left trying to guess what a group of people (the Federal Reserve, for example) will think is appropriate seven years from now. Because we can’t even know for sure who is going to be on the FOMC in seven years’ time, this is an exceedingly difficult task. Pythia herself may have struggled with such a challenge.


Learning Objectives

  • Identify possible shortfalls in conventional interest rate relationships
  • Interpret the significance of the role played by interest rates on asset values
  • Interpret evidence that bond markets have been unsuccessful in predicting future short term real rates
  • Analyse the five ‘myths’ described in the webcast
  • Analyse arguments that fiscal policy could prove more beneficial than monetary policy for value investors

CPD Hours

0h 49m

Programme Activity

Activity Name
The Idolatry of Interest Rates - Webcast
The Idolatry of Interest Rates - Structured Assessment