What are the macroeconomic effects of asset purchases?

Martin Weale, Tomasz Wieladek, 10 June 2014

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After policy rates fell close to zero in response to the global financial crisis of 2008-09, the scope for further conventional monetary policy easing was exhausted. As a result, both the Bank of England and the Federal Reserve embarked on large-scale asset purchases of government and financial securities (see Figures 1 and 2).

Topics: Monetary policy
Tags: Bank of England, Federal Reserve, inflation, output, Phillips curve, quantitative easing, unconventional monetary policy

The transmission of Federal Reserve tapering news to emerging financial markets

Joshua Aizenman, Mahir Binici, Michael M Hutchison, 4 April 2014

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The quantitative easing (QE) policies of the US Federal Reserve in the years following the crisis of 2008–2009 included monthly securities purchases of long-term Treasury bonds and mortgage-backed securities totalling $85 billion in 2013. The cumulative outcome of these policies has been an unprecedented increase of the monetary base, mitigating the deflationary pressure of the crisis.

Topics: Exchange rates, International finance, Monetary policy
Tags: asset prices, Credit Default Swaps, emerging markets, exchange rates, Federal Reserve, stock markets, tapering

Turmoil in emerging markets: What’s missing from the story?

Kristin Forbes, 5 February 2014

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Emerging markets are going through another period of volatility – and the most popular boogeyman is the US Federal Reserve.

Topics: International finance
Tags: capital flows, emerging markets, Federal Reserve, global financial crisis, tapering

Unconventional monetary policy normalisation and emerging-market capital flows

Andrew Burns, Mizuho Kida, Jamus Lim, Sanket Mohapatra, Marc Stocker, 21 January 2014

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Quantitative easing (QE), which started in 2008, swelled the Federal Reserve’s balance sheet to an unprecedented $3.4 trillion. In May 2013, the Fed announced that it would evaluate the possibility of a reversal of its unconventional monetary policies – QE in particular .

Topics: Financial markets, International finance, Monetary policy
Tags: Federal Reserve, quantitative easing, tapering, unconventional monetary policy

Tapering talk: The impact of expectations of reduced Federal Reserve security purchases on emerging markets

Barry Eichengreen, Poonam Gupta, 19 December 2013

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In May 2013, Federal Reserve officials first began to talk of the possibility of the US central bank tapering its securities purchases from $85 billion a month to something lower. A milestone to which many observers point is 22 May 2013, when Chairman Bernanke raised the possibility of tapering in his testimony to Congress.

Topics: Exchange rates, Monetary policy
Tags: capital controls, Capital inflows, currency war, emerging markets, exchange rates, Federal Reserve, Macroprudential policies, monetary policy, tapering

Dark side of housing-price appreciation

Indraneel Chakraborty, Itay Goldstein, Andrew MacKinlay, 25 November 2013

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Policymakers around the world often worry about decreases in real-estate prices and other asset prices, and take measures to prevent them. For example, in the aftermath of the financial crisis, the Federal Reserve has engaged in large-scale asset purchases – especially of mortgage-backed assets – to support the housing market and, in turn, the overall economy.

Topics: Financial markets, Monetary policy
Tags: asset prices, banks, Federal Reserve, housing, investment, lending, real estate

Forward policy guidance at the Federal Reserve

John C. Williams, 16 October 2013

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In response to the financial crisis, the Federal Open Market Committee (FOMC) lowered the target federal funds rate to essentially zero in December 2008, where it has remained.

Topics: Monetary policy
Tags: Federal Reserve, forward guidance

Unwinding quantitative easing

Stephen Grenville, 22 June 2013

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Fed Chairman Ben Bernanke’s prepared statement on 22 May was the epitome of even-handed non-committal drafting (Federal Reserve 2013b) but the mention of "stepping down" and "in the next few meetings" in the discussion sent a shiver through financial markets worldwide.

Topics: Global crisis, International finance
Tags: Bernanke, Federal Reserve, QE

Is the Federal Reserve breeding the next financial crisis?

Ambrogio Cesa-Bianchi, Alessandro Rebucci, 11 April 2013

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According to many economists, monetary policy played a central role in exacerbating the severity of the global financial crisis of 2007-09.

Topics: Global crisis
Tags: Federal Reserve, financial crisis

The influence of the Taylor rule on US monetary policy

Pelin Ilbas, Øistein Røisland, Tommy Sveen, 13 February 2013

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The Taylor rule has undoubtedly influenced the debate about monetary policy over the last 20 years. But has it directly influenced monetary policy? According to a survey by Kahn (2012), the answer seems to be that it has. The transcripts from the Federal Open Market Committee meetings include several references to the rule.

Topics: Monetary policy
Tags: Fed, Federal Reserve, Taylor rule, US

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