The experiences of foreign economies suggest that the relationship between debt and interest rates is complex and likely non-linear, with the influence of greater debt on interest rates rising as the debt-to-GDP ratio reaches a trajectory at which investors have concerns about its sustainability.
In this light, it is notable that the current ratio of debt to GDP is substantially larger than it was preceding the fiscal expansions in the early 1980s and early 2000s and has already been projected to increase further based on demographic trends.12  Guideposts for monetary policy With any future change in fiscal policy quite uncertain, monetary policy will be guided by the current state of the economy, the underlying momentum of economic activity and inflation, the level of the neutral rate, and the balance of macroeconomic risks.