Forward guidance and "lower for longer": The case of the ECB

Arbeitspapier

A number of contributions to research on monetary policy have suggested that policy should be asymmetric near the lower bound on nominal interest rates. As inflation and economic activity decline, policy should ease more aggressively than it would in the absence of the lower bound. As activity recovers and inflation picks up, the central bank should act to keep interest rates lower for longer than without the bound. In this note, we investigate to what extent the policy easing implemented by the ECB since summer 2013 mirrors the rate recommendations of a simple policy rule or deviates from it in a way that indicates a 'lower for longer' approach to policy near zero interest rates.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMFS Working Paper Series ; No. 102

Classification and Topics

• Classification: Wirtschaft ; Interest Rates: Determination, Term Structure, and Effects ; Money and Interest Rates: Forecasting and Simulation: Models and Applications ; Monetary Policy ; Central Banks and Their Policies
• Subject: monetary policy ; interest rates ; European Central Bank ; forward guidance ; zero lower bound

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bletzinger, Tilman ; Wieland, Volker
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)
• (where): Frankfurt a. M.
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/129067
• URN: urn:nbn:de:hebis:30:3-395780
• Last update: 10.03.2025, 11:43 AM CET