(Bloomberg) -- The recent rise in long-term interest rates reflects higher risk premiums as opposed to concerns about inflation, Federal Reserve Bank of Richmond President Thomas Barkin said.
“There is no question in my mind that as a lot more federal debt comes onto the market, that it is at times overwhelming the demand, and that is what creates the increase in yields,” Barkin said Thursday during a virtual event hosted by the Virginia Bankers Association.
“I don’t think it is inflation, I think it is term premium. And the term premium has something to do with risk — but I sense it has something to do with the balance of supply and demand in the long end.”
Yields on longer-term Treasury securities have risen this week to the highest levels in more than a year, with the 20-year yield briefly crossing above 5% on Wednesday.
Barkin, who does not vote on Fed interest-rate decisions this year, made the comments on yields while answering questions after delivering remarks similar to a speech he gave at a separate event on Jan. 3.
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