Understanding “liftoff”: how Fed policy tightening would actually work

A new “primer” explains how the Fed would tighten policy under current “superabundant liquidity”. Similar to the past, the focus would be on the...

Term premia in the times of “lift-off”

Equilibrium models suggest that as long as the policy rate is firmly near zero, the term premium on longer-dated yields is compressed by a...

Why bond yield compression cannot easily be reversed

Non-conventional monetary policy has inflated central banks’ balance sheets and compressed long-term yields. A new BIS paper makes some points on why reversing this...

ECB policy framework in six basic points

The European Central Bank is one of the most powerful institutions in the world and is running a particularly complex policy framework. For macro...

Measuring non-conventional monetary policy surprises

A new paper proposes a measure for monetary policy surprises that arise from asset purchases and forward guidance. The idea is to estimate the...

The side-effects of non-conventional monetary policy

A BIS summary of research gives a nice overview on non-conventional monetary policies and their unintended systemic consequences. Current policies appear to yield diminishing returns in terms...

The deflationary bias of low interest rates

Compressed interest rates raise the risk of hitting the zero lower bound. A new theoretical ECB paper shows that even before the ZLB is...

Understanding the ECB’s latest tool: TLTROs

On 5 June 2014 the European Central Bank announced Targeted Long-Term Repo Operations (TLTROs]. Their main purpose is to stimulate bank lending to non-financial...

ECB asset purchases: key points to memorize

The ECB 2015/16 asset purchase program will include sovereign and quasi sovereign debt, ABS, and covered bonds. The envisaged annualized pace of balance sheet...

The dangers of ultra-low interest rates in Europe

Negative nominal interest rates and term premia are an issue for financial stability in Europe, according to a recent speech by the Deputy General...

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