21 Figure 7 illustrates how long-term interest rates, which are widely viewed as important for businesses’ and households’ economic decisions, move in anticipation of changes in the federal funds rate. The red line is the average 10-year triple-B corporate bond rate. It is a measure of corporate borrowing costs. The blue line is the average 30year mortgage rate.
It is a measure of household borrowing costs. Notice that both measures increased in early 2022 in response to Fed communications and in anticipation of increases in the effective federal funds rate, the black line. Higher long-term interest rates increase the cost of borrowing money for households and businesses.