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Press release from PR Newswire

Interest Rate Normalization Expected During Multi-Year U.S. Economic Expansion, Says BNY Mellon's Chief Economist Richard Hoey

Friday, June 28, 2013

Interest Rate Normalization Expected During Multi-Year U.S. Economic Expansion, Says BNY Mellon's Chief Economist Richard Hoey

08:30 EDT Friday, June 28, 2013

NEW YORK and LONDON, June 28, 2013 /PRNewswire/ -- The normal cyclical rise in interest rates, which was delayed due to the financial crisis and recession and by Federal Reserve actions to hold down bond yields, is now emerging, according to BNY Mellon Chief Economist Richard Hoey as outlined in his most recent Economic Update. 

"We believe that a persistent multi-year upward drift in interest rates is now likely," said Hoey.  "The aftermath of the three-decade-long decline in interest rates is likely to be labeled a secular bond bear market, but we prefer to view it in the context of the cyclical normalization of interest rates that we expect over a half-decade period."

"If we are correct to expect real GDP growth of 3% or more for the next three years, 10-year Treasury bond yields are likely to eventually normalize at about 5% at the end of a half-decade-long process of interest rate normalization," Hoey continued. 

Hoey states that the economic impact of an interest rate rise is very sensitive to the cyclical stage of monetary policy and outlines what he thinks are five stages of monetary policy:  (1) aggressively stimulative (2) stimulative, (3) neutral, (4) restrictive and (5) aggressively restrictive. 

"The Federal Reserve plans a gradual move from aggressively stimulative to merely simulative, in response to evidence that the U.S. economy is in a sustainable economic expansion," Hoey concludes. 

See  for Hoey's complete June 2013 Economic Update.

Notes to Editors:

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 36 countries and more than 100 markets. As of March 31, 2013, BNY Mellon had $26.3 trillion in assets under custody and/or administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on, or follow us on Twitter @BNYMellon.

All  information source BNY Mellon as of March  31, 2013. This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance.  The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Conduct  Authority. A BNY Mellon Company.


For further information: Patrice Kozlowski, +1 212 922 6030,; or Sarah Deutscher, +44 20 763 2744,

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