Forward guidance has made monetary policy less effective
klementoninvesting.substack.com
I am on the record as someone who believes that monetary policy has become almost completely ineffective. One reason for central banks’ inability to stimulate the economy is the zero lower bound on interest rates. As interest rates approach zero, central banks have less room to cut interest rates and even if they do (and engage in non-traditional policy measures like quantitative easing) it makes little to no difference to businesses and households. If you haven’t taken out a loan at 0.5% interest rates, why should you take one out at 0.25% or 0%?
Forward guidance has made monetary policy less effective
Forward guidance has made monetary policy…
Forward guidance has made monetary policy less effective
I am on the record as someone who believes that monetary policy has become almost completely ineffective. One reason for central banks’ inability to stimulate the economy is the zero lower bound on interest rates. As interest rates approach zero, central banks have less room to cut interest rates and even if they do (and engage in non-traditional policy measures like quantitative easing) it makes little to no difference to businesses and households. If you haven’t taken out a loan at 0.5% interest rates, why should you take one out at 0.25% or 0%?