Archive | November 2014
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The concept of a Neutral Policy Rate has a very specific meaning in contemporary central bank practice. The neutral policy rate is the short-term interest rate consistent with full employment, inflation equal to the central bank’s inflation target and inflation expectations that are well-anchored to the inflation target. The neutral policy rate is related to […]
Although the Fed often stated that it had no set time frame for removing their ultra-accommodative policy (zero interest rates and QE), investors knew, given Chairman Bernanke’s exit strategy roadmap, that as long as the QE program was ongoing, they need not worry about imminent increases in the Federal Funds rate. Now that the QE […]