The Federal Reserve targets the overnight federal funds rate, and for almost a year this rate has stood at 1 percent. By comparison, the funds rate averaged more than 5 percent during the 1990s, and was last at 1 percent in the 1950s.
Similarly, the yield on a ten-year Treasury note now stands near 4 percent - a level not seen since 1963 and more than 3 percentage points below the average of the past twenty years. These low rates are no accident. The economy began to weaken in late 2000, and aggregate activity began to contract in early 2001.