Michael T. Belongia and Kees G. Koedijk re-examine a basic model of interest rate determination by considering the effects of several well-known policy changes. They consider how changes in the Federal Reserve’s implementation of monetary policy and the operation of the European Monetary System may have affected interest rate behavior. Using data for five countries, the authors find that forward rates are not related one-to-one with changes in actual three-month interest rates in the United States, Germany, and Switzerland. Even though considering the operating procedures of the Fed and the EMS led to some improvement in the results, the persistent model rejections leave behind many unsolved puzzles.