Issues Regarding the Use of the Policy Rate Tool
38 Pages Posted: 2 Sep 2020
Date Written: August, 2020
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.
JEL Classification: E32, E43, E44, E52, E58
Suggested Citation: Suggested Citation