The Globe and Mail reports in its Saturday, Aug. 24, edition that the current belief among bond investors is that the Federal Reserve will significantly reduce interest rates, bringing them back to the levels of the previous decade. The Globe's John Rapley writes that the Fed, however, has been stating that while interest rates will indeed decrease, it will not be by as much as investors anticipate. Despite recent low inflation rates, longer-term trends suggest that inflation may stay closer to 3 per cent rather than the Fed's target of 2 per cent, and could even increase. Additionally, although the economy is weaker than it was last year, it is still experiencing strong growth, ongoing wage increases, job creation and low unemployment rates. Even the recent negative revision to job data has not actually changed the overall view. Instead, it might indicate that U.S. productivity, which has been outperforming its counterparts, is even stronger than previously thought. Mr. Rapley says the realization will probably gradually dawn on the market that interest rates, while coming down, may remain permanently higher than they were in the period between the 2008 financial crisis and the pandemic.