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Speech
Comments on “A Skeptical View of the Impact of the Fed’s Balance Sheet”: remarks at the 2018 U.S. Monetary Policy Forum, New York City
Dudley, William (2018-02-23)
Remarks at the 2018 U.S. Monetary Policy Forum, New York City.
Speech , Paper 275

Journal Article
Monetary Policy and Economic Performance Since the Financial Crisis
Caldara, Dario; Gagnon, Etienne; Martinez-Garcia, Enrique; Neely, Christopher J. (2021-10-18)
We review the macroeconomic performance during the Global Financial Crisis and subsequent economic expansion, as well as the challenges in the pursuit of the Federal Reserve's dual mandate. We characterize the use of forward guidance and balance sheet policies after the federal funds rate reached the effective lower bound. We also review the evidence on the efficacy of these tools and consider whether policymakers might have used them more forcefully. Finally, we examine the post-crisis experience of other major central banks with these policy tools.
Review , Volume 103 , Issue 4 , Pages 425-460

Journal Article
Monetary Policy Stance Is Tighter than Federal Funds Rate
Choi, Jason; Doh, Taeyoung; Foerster, Andrew; Martinez, Zinnia (2022-11-07)
The Federal Reserve’s use of forward guidance and balance sheet policy means that monetary policy consists of more than changing the federal funds rate target. A proxy federal funds rate that incorporates data from financial markets can help assess the broader stance of monetary policy. This proxy measure shows that, since late 2021, monetary policy has been substantially tighter than the federal funds rate indicates. Tightening financial conditions are similar to what would be expected if the funds rate had exceeded 5¼% by September 2022.
FRBSF Economic Letter , Volume 2022 , Issue 30 , Pages 5

Report
How to escape a liquidity trap with interest rate rules
Duarte, Fernando M. (2016-02-01)
I study how central banks should communicate monetary policy in liquidity trap scenarios in which the zero lower bound on nominal interest rates is binding. Using a standard New Keynesian model, I argue that the key to anchoring expectations and preventing self-fulfilling deflationary spirals is to promise to keep nominal interest rates pegged at zero for a length of time that depends on the state of the economy. I derive necessary and sufficient conditions for this type of state-contingent forward guidance to implement the welfare-maximizing equilibrium as a globally determinate (that is, ...
Staff Reports , Paper 776

Working Paper
Forward Guidance with Bayesian Learning and Estimation
López-Salido, J. David; Gust, Christopher J.; Herbst, Edward (2018-10-25)
Considerable attention has been devoted to evaluating the macroeconomic effectiveness of the Federal Reserve's communications about future policy rates (forward guidance) in light of the U.S. economy's long spell at the zero lower bound (ZLB). In this paper, we study whether forward guidance represented a shift in the systematic description of monetary policy by estimating a New Keynesian model using Bayesian techniques. In doing so, we take into account the uncertainty that agents have about policy regimes using an incomplete information setup in which they update their beliefs using Bayes ...
Finance and Economics Discussion Series , Paper 2018-072

Working Paper
Quantifying Forward Guidance and Yield Curve Control
Koeda, Junko; Wei, Bin (2024-09-23)
This study evaluates the effectiveness of Japan's unconventional monetary policies over the past quarter century within a unified term structure framework. It specifically examines the impact of the Bank of Japan's (BOJ) outcome-based forward guidance and yield curve control (YCC) and incorporates other policy types into the framework. The findings show that the BOJ’s forward guidance and YCC have both had a significant impact on the shadow rate. Forward guidance accounted for most of the policy impact in the early stages of unconventional monetary policies and remained influential ...
FRB Atlanta Working Paper , Paper 2024-8

Working Paper
Monetary Policy and Real Borrowing Costs at the Zero Lower Bound
López-Salido, J. David; Gilchrist, Simon; Zakrajšek, Egon (2014-05-07)
This paper compares the effects of conventional monetary policy on real borrowing costs with those of the unconventional measures employed after the target federal funds rate hit the zero lower bound (ZLB). For the ZLB period, we identify two policy surprises: changes in the 2-year Treasury yield around policy announcements and changes in the 10-year Treasury yield that are orthogonal to those in the 2-year yield. The efficacy of unconventional policy in lowering real borrowing costs is comparable to that of conventional policy, in that it implies a complete pass-through of policy-induced ...
Finance and Economics Discussion Series , Paper 2014-39

Journal Article
What Is the Monetary Standard? The Fed Should Tell Us
Hetzel, Robert L. (2024-01-05)
The Federal Reserve System (Fed) is a regular feature in the media. When the Fed communicates with the public, its focus is on forward guidance related to monetary policy—specifically, for achieving low unemployment and low inflation. Fed participants on the Federal Open Market Committee (FOMC) convey what they see as the likely path of policy, including changes in the federal funds rate, a standard monetary policy tool. Because financial markets find this information useful, news stories thoroughly cover Fed communication.However, such communication fails to explain the structure of the ...
Review , Volume 106 , Issue 1 , Pages 10-39

Working Paper
Delphic and Odyssean Monetary Policy Shocks: Evidence from the Euro Area
Ferroni, Filippo; Andrade, Philippe (2018-07-26)
We use financial intraday data to identify monetary policy surprises in the euro area. We find that monetary policy statements and press conferences after European Central Bank (ECB) Governing Council meetings convey information that moves the yield curve far out. Moreover, the nature of the information revealed in a narrow window around these statements and press conferences evolved over time. Until 2013, unexpected variations in future interest rates were positively correlated with the changes in market-based measure of inflation expectations consistent with news on future macroeconomic ...
Working Paper Series , Paper WP-2018-12

Speech
Moving toward 'normal' U.S. monetary policy: remarks at the Joint Bank Indonesia-Federal Reserve Bank of New York Central Banking Forum, Nusa Dua, Indonesia
Williams, John C. (2018-10-10)
Remarks at the Joint Bank Indonesia-Federal Reserve Bank of New York Central Banking Forum, Nusa Dua, Indonesia.
Speech , Paper 296

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