Series: Occasional Papers. 1404.
Author: Juan Carlos Berganza, Ignacio Hernando and Javier Vallés.
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Abstract
After almost six years with official interest rates at close to zero and with numerous unconventional measures still in place, 2014 is witnessing the beginning of the process of monetary normalisation in those economies, such as the United States and the United Kingdom, in which the recovery seems to have taken hold. However, the Bank of Japan is still implementing an ambitious programme of monetary expansion and the ECB has recently adopted new expansionary measures. This paper first assesses the various extraordinary monetary policy programmes conducted by the major central banks in advanced economies in response to the global financial crisis. Second, it sets out the risks associated with keeping the existing measures in place and raises questions in relation to the gradual withdrawal of these stimuli. Finally, it offers some lessons for the conduct of monetary policy in the future.