In this post, I am going to talk about the efficacy of monetary policy in the face of uncertainty.
In an earlier post, I have talked about uncertainty reducing interest rate sensitivity – but does that mean that the efficacy of monetary policy has declined? No, as ultimately, we need to think about how any investment response translates into a change in output!
Read moreIn a recent response to questions, The Reserve Bank of Australia has listed six options of unconventional monetary policy that is considered in an event of extreme policy implementation. Westpac economists have also talked about potential unconventional monetary policy tools applicable to the NZ case here – this is worth a read, but is a different list!
In this post I would like to outline the RBA’s options and hopefully make them easy to understand.
Read moreRecently I’ve been trying to get my head around the difference between a “sterilized” asset purchase by a central bank and an “unsterilized” purchase. Here is where I’ve gotten to – happy for any comments or clarifications!
Read moreAs per my earlier post, this follow up aims to understand how uncertainty influences monetary policy. Although we will use the lens of investment, these arguments hold for planned expenditure in the economy more generally.
Read moreWhy uncertainty matters?
The OECD has been warning everyone (Economic outlook 2019) , that the trade policy tension and uncertainty around it hit global economy hard. My question is, how can we think about uncertainty and its influence on monetary policy?
Read moreI’ve heard the arguments that secular stagnation refers to a situation with low long-term interest rates – reaching the zero lower bound on nominal rate often – low inflation and low output growth. But what does this really mean?