How Interest Rate Changes Impact Bond Reinvestment Decisions
Georgina Walleshauser
February 27, 2025
It is important to consider the current interest rate environment when deciding how to reinvest tax-exempt bond proceeds. In particular, the yield curve can offer signals for how to best optimize a reinvestment structure. It is also important to consider the expectation of interest rate movements in the near future. While future interest rates cannot be predicted with certainty, reinvestment rates are shorter term and tend to closely follow the federal funds rate, for which the FOMC offers certain market signals