little choice but to take actions that keep nominal long - term rates relatively low, as suggested by the similarity see, for example, campbell, sunderam, and viceira ( 2009 ). there are some additional more technical features of the treasury market that push down the term premium. for example, the treasury term premium is likely also depressed by the global demand for treasury securities for use as collateral or margin in funding or derivatives markets. see, for example, gagnon, raskin, remache, and sack ( 2011 ) ; li and wei ( 2012 ) ; hamilton and wu ( 2012 ) ; d ’ amico, english, lopez - salido, and nelson ( 2012 ) ; rosa ( 2012 ) ; krishnamurthy and vissing - jørgensen ( 2011 ) ; and hancock and passmore ( 2012 ). term premiums, calculated using similar methods, have also declined fairly sharply recently in canada, germany, and the united kingdom ; somewhat less so in japan. this result is notable in that the central banks of these economies, with the exception of the bank of england, have not pursued large - scale purchases of longer - term securities. bis central bankers ’ speeches in the levels of the rates shown in chart 1. finally, term premiums are low or negative, reflecting a host of factors, including central bank actions in support of economic recovery. thus, while the current constellation of long - term rates across many advanced countries has few precedents, it is not puzzling : it follows naturally from the economic circumstances of these countries and the implications of these circumstances for the policies of their central banks. how are long - term rates likely to evolve? so, how are long - term rates likely to evolve over coming years? it is worth pausing to note that, not that long ago, central bankers would have carefully avoided this topic. however, it is now a bedrock principle of central banking that transparency about the likely path of policy, in general, and interest rates, in particular, can increase the effectiveness of policy. in the present context, i would add that transparency may mitigate risks emanating from unexpected rate movements. thus, let me turn to prospects for long - term rates, starting with the expected path of rates and then turning to deviations from the expected path that may arise. if, as the fomc anticipates, the economic recovery continues at a moderate pace, with unemployment slowly declining and inflation expectations remaining near 2 percent,

then long - term interest rates would be expected to rise gradually toward more normal levels over the next several years. this rise would occur as the market ’ s view of the expected date at which the federal reserve will begin the removal of policy accommodation draws nearer and then as accommodation is removed. some normalization of the term premium might also contribute to a rise in long - term rates. to illustrate possible paths, chart 4 displays four different forecasts of the evolution of the 10 - year treasury yield over coming years. the black line is the forecast reported in the december 2012 blue chip financial forecasts survey. the green line gives the congressional budget office forecast published in february, and the blue line presents the median from the survey of professional forecasters, as reported in the first quarter of this year. finally, the purple line shows a forecast based on the term structure model used for the decomposition of the 10 - year yield in chart 2. 12 while these forecasts embody a wide range of underlying models and assumptions, the basic message is clear – long - term interest rates are expected to rise gradually over the next few years, rising ( at least according to these forecasts ) to around 3 percent at the end of 2014. the forecasts in chart 4 imply a total increase of between 200 and 300 basis points in long - term yields between now and 2017. of course, the forecasts in chart 4 are just forecasts, and reality might well turn out to be different. chart 5 provides three complementary approaches to summarizing the uncertainty surrounding forecasts of long - term rates. the dark gray bars in the chart are based on the range of forecasts reported in the blue chip financial forecasts, the blue bars are based on the historical uncertainty regarding long - term interest rates as reflected in the board staff ’ s frb / us model of the u. s. economy, and the orange bars give a market - based measure of uncertainty derived from swaptions. these three different measures give a broadly similar picture about the upside and downside risks to the forecasts of long - term rates. rates 100 basis points higher than the expected paths in chart 4 by 2014 are certainly plausible outcomes as judged by each of the three measures, and this uncertainty grows to as much as 175 basis points by 2017. note, though, that while the risk of an unexpected rise in interest rates has drawn much attention, the level of long - term interest rates also could prove this projection assumes that two key components of the