Tag Archives: rates

Why the Fed Balance Sheet Reduction Won’t Affect the Economy – And Why It Will

Quantitative Tightening, as envisaged by the Fed, implies an equivalent, and ultimately sizeable, reduction of bank reserves on the liability side of the Fed’s balance sheet.  However, changes in monetary aggregates have little impact on the real economy or inflation. … Continue reading

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The BoJ’s New Monetary Experiment: Riddled with Inconsistencies

Adding to its already wide-ranging arsenal of of monetary policy tools, the BoJ last week introduced yet another feature: “QQE with yield curve control”. In addition to the short term rate, the new regime aims to peg the long term interest rate … Continue reading

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A Bad Idea Returns: Negative Deposit Rates

As ECB policy rates skirt the zero bound, expectations for the use of alternative tools, such as negative deposit rates are again on the rise. However, this is  an ineffective and potentially harmful policy option. Several problems may arise: transmission across other … Continue reading

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Fed: Still Easing After All These Years – Interpretation & Asset Implications

In its new round of quantitative easing, the Fed’s operations are now open-ended, unlike in previous instances. What is more, in what could mark a turning point in its approach to monetary policy, it signaled that its loose stance might … Continue reading

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