The U.S. Fed’s new tools to control short-term rates

A Federal Reserve paper describes and evaluates monetary policy tools for managing short-term market rates in an environment of large-scale excess reserve money in...

Central banks and equity market distress

A short Bundesbank paper presents evidence that the Federal Reserve, the ECB, and the Bank of England have long used policy rates to stabilize...

An updated guide to ECB non-conventional monetary policy

The ECB now runs one of the most complex monetary policy regimes. Beyond regular liquidity supply, its operating framework features long-term full-allotment refinancing operations, generous collateral acceptance,...

How to hike U.S. federal funds rates in a glut of...

Asset purchase programs have left the U.S. banking system with USD2.9 trn in (mostly excess) reserves. Raising the target federal funds rate in this...

Understanding ECB forward guidance

ECB forward (policy rate) guidance has the declared intent to communicate the Governing Council's reaction function and its assessment of the economy. It is...

The Federal Reserve’s strategy after tapering

William Dudley provided an update of the Fed’s strategy for normalizing monetary policy. Under appropriate economic conditions, policy rates could begin rising in 2015,...

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....

Self-fulfilling tightening and recessions in a low interest rate world

A new Bank of England paper points to a dangerous pitfall for monetary policy in a low rates environment. “Speed-limit rules” stipulate that central...

U.S. Fed “tapering”: The basics in the FOMC’s own words

Envisaged Fed tapering is simply predicated on five principles: (a) balance sheet expansion will slow and ultimately cease if unemployment declines on a sustained...

The ultimate policy options of the European Central Bank

In case of further negative shocks the ECB has three final policy options. First, it could nudge its refinancing rate close to zero and become...

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