Falling oil prices and the risk for zero-rate economies

A Bank of Italy paper illustrates the detrimental effect of a “negative cost push shock” (for example a commodity price drop) on an economy...

A lecture in euro area money markets

Paul Mercier, principal adviser at the ECB, has summarized the basics and recent history of euro area money markets. His tale emphasizes what investors...

Understanding the U.S. monetary policy framework

A new staff paper summarizes the Federal Reserve’s policy framework, as it evolved in the face of the zero lower bound for interest rates....

The Federal Reserve’s reliance on macroprudential policy

In a recent speech Federal Reserve Chair Yellen has emphasized the economic cost of making financial risk a key consideration of monetary policy. While...

The impact of non-conventional monetary policy on financial markets

The April 2013 IMF Global Financial Stability Report takes stock of the market impact of non-conventional central bank policies. In particular, the latter have replaced...

Policy rates and equity volatility

Measures of monetary policy rate uncertainty significantly improve forecasting models for equity volatility and variance risk premia. Theoretically, there is a strong link between...

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...

Monetary policy risk management in the U.S.

A Chicago Fed paper argues that economic uncertainty at the zero lower bound (ZLB) should be a cause of looser monetary policy. This is...

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...

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...

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