
How High Will Interest Rates Go?
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The Effects of Interest Rate Swaps on the Bond Market
The bank rate is what the Bank of England pays as interest for banks that park their money at the central bank. Different bonds with different maturities have different yields and different coupons. And the ones that are most affected by the bank rate are the short duration ones. The long end of the curve is driven much more by expectations about growth and inflation, which indirectly are affected by short-term interest rates but not directly.
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