Important drivers of recent lower outcomes include competition in the retail sector, historically low increases in rents, low wages growth and slower growth in some administered prices.
How should one expect a company to respond when its long-term borrowing costs fall not because of a change in the expected future path of short-term rates, but because of a change in the term premium? As noted earlier, many macro models – like the Fed’s FRB/US model – treat the two sorts of shocks as having similar effects.