Working Paper
Issues Regarding the Use of the Policy Rate Tool
Abstract: We review two nonstandard uses of the policy rate tool, which provide additional stimulus when interest rates are close to or at the effective lower bound—forward guidance and negative interest rate policy. In particular, we survey the use of these tools since the star otf the Great Recession, review evidence of their effectiveness, and discuss key considerations that confront monetary policymakers while using them.
Keywords: Monetary policy; Effective lower bound; Forward guidance; Central bank communication; Negative interest rate policy;
JEL Classification: E32; E43; E44; E52; E58;
https://doi.org/10.17016/FEDS.2020.070
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File(s): File format is application/pdf https://www.federalreserve.gov/econres/feds/files/2020070pap.pdf
Bibliographic Information
Provider: Board of Governors of the Federal Reserve System (U.S.)
Part of Series: Finance and Economics Discussion Series
Publication Date: 2020-08-27
Number: 2020-070