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Fed communication and the zero lower bound

Author

Listed:
  • Carlos Carvalho
  • Eric Hsu
  • Fernanda Nechio

Abstract

After the onset of the global financial crisis, the Federal Reserve had to rely on other tools?including communication?to work around the constraints of being unable to lower the federal funds rate below zero. One way to assess how effective these communications were is by estimating how interest rates on bonds with different maturities reacted to Fed communications before and after the zero-bound period. A measure based on news reports of Fed communications suggests that this tool gave the Fed some ability to affect long-term yields through its communications.

Suggested Citation

  • Carlos Carvalho & Eric Hsu & Fernanda Nechio, 2016. "Fed communication and the zero lower bound," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00099
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    References listed on IDEAS

    as
    1. Carlos Carvalho & Eric Hsu & Fernanda Nechio, 2016. "Measuring the effect of the zero lower bound on monetary policy," Working Paper Series 2016-6, Federal Reserve Bank of San Francisco.
    2. Michael D. Bauer, 2012. "Fed asset buying and private borrowing rates," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may21.
    3. Michael D. Bauer & Glenn D. Rudebusch, 2014. "The Signaling Channel for Federal Reserve Bond Purchases," International Journal of Central Banking, International Journal of Central Banking, vol. 10(3), pages 233-289, September.
    4. Refet S Gürkaynak & Brian Sack & Eric Swanson, 2005. "Do Actions Speak Louder Than Words? The Response of Asset Prices to Monetary Policy Actions and Statements," International Journal of Central Banking, International Journal of Central Banking, vol. 1(1), May.
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    Cited by:

    1. Domenico Lombardi & Pierre L. Siklos & Samantha St. Amand, 2019. "Government Bond Yields At The Effective Lower Bound: International Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 102-120, January.

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