Monetary policy in the United States has been shown to have large effects on foreign economies and financial cycles. This analysis typically focuses on business-cycle fluctuations. Bianchi and others (2022) show that because of structural changes in the Fed’s implicit inflation target and level of activism, US monetary policy can also account for decades-long movements in real interest rates and asset prices. However, Bianchi and others (2022) leave the reasons for these shifts in the tolerable level of inflation unexplained. In this paper, we conjecture that, at least in part, these changes can be explained by the interaction between monetary and fiscal policy and study the implications of such interaction for low-frequency movements in real interest rates.