U.S. natural interest rate stuck at 0%: evidence and consequences

Federal Reserve research supports the view that the natural rate of interest in the U.S. has not recovered from its plunge to an unprecedented historical...

The secular decline in the global equilibrium real interest rate

A new Bank of England paper finds a 450 bps decline in global equilibrium real interest rates over the past 35 years, due to a...

Why money markets remain vulnerable

New theoretical work shows that money markets remain fragile as long as there is a connection between asset prices, secured funding and unsecured funding. The degree...

The role of macroprudential policy

Macroprudential measures are often seen as a counterweight to ultra-easy monetary policy in the developed world. BIS research cautions against this expectation. Macroprudential policies are...

What we can learn from the “fiscal theory of inflation”

Fiscal policy is as important as monetary policy for inflation dynamics. Government debt has features similar to money and affects private wealth and prices....

BIS re-interpretation of TARGET2 (im-)balances

In an easily readable working paper Stephen Cecchetti and colleagues explain the connection between euro area break-up concerns, Target2 balances, and financial conditions. This...

The “collateral channel” of monetary policy

The importance of collateralized transactions for the global financial system has greatly increased since the financial crisis. Moreover, the influence of central banks on...

How central banks can take nominal rates deeply negative

The popular view that nominal interest rates have a natural zero lower bound has become obsolete in modern financial systems. It may be more...

Quantitative easing and the collateral problem

Another (IMF) paper of Manmohan Singh deals with the influence of non-conventional monetary policy on collateralized borrowing. In past years, quantitative easing (QE) has absorbed collateral...

Monetary policy stance in one indicator

New research proposes to condense policy rates and balance sheet actions into a single implied short-term interest rate. To this end the term premium...

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