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Fed asset buying and private borrowing rates

Author

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  • Michael D. Bauer

Abstract

Past rounds of large-scale asset purchases by the Federal Reserve have lowered yields not only on the targeted securities, but also on various private borrowing rates. In particular, yields on corporate bonds and primary mortgage rates decreased in response to Fed asset purchase announcements. Notably, however, the link between rates on mortgage-backed securities and actual mortgage rates has weakened in the wake of the financial crisis.

Suggested Citation

  • Michael D. Bauer, 2012. "Fed asset buying and private borrowing rates," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may21.
  • Handle: RePEc:fip:fedfel:y:2012:i:may21:n:2012-16
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    File URL: http://www.frbsf.org/publications/economics/letter/2012/el2012-16.html
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    File URL: http://www.frbsf.org/publications/economics/letter/2012/el2012-16.pdf
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    References listed on IDEAS

    as
    1. Arvind Krishnamurthy & Annette Vissing-Jorgensen, 2011. "The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy," NBER Working Papers 17555, National Bureau of Economic Research, Inc.
    2. Arvind Krishnamurthy & Annette Vissing-Jorgensen, 2011. "The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 215-287.
    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. Arvind Krishnamurthy & Annette Vissing-Jorgensen, 2011. "The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 215-287.
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    Cited by:

    1. J. Boeckx & N. Cordemans & M. Dossche, 2013. "Causes and implications of the low level of the risk-free interest rate," Economic Review, National Bank of Belgium, issue ii, pages 63-88, September.
    2. repec:bla:pacecr:v:21:y:2016:i:5:p:560-580 is not listed on IDEAS
    3. Barroso, João Barata R.B. & da Silva, Luiz A. Pereira & Sales, Adriana Soares, 2016. "Quantitative easing and related capital flows into Brazil: Measuring its effects and transmission channels through a rigorous counterfactual evaluation," Journal of International Money and Finance, Elsevier, vol. 67(C), pages 102-122.
    4. Kazuo Ueda, 2013. "Response of Asset Prices to Monetary Policy under Abenomics," Asian Economic Policy Review, Japan Center for Economic Research, vol. 8(2), pages 252-269, December.
    5. Carvalho, Carlos & Hsu, Eric & Nechio, Fernanda, 2016. "Fed communication and the zero lower bound," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    6. Ahmed, Shaghil & Zlate, Andrei, 2014. "Capital flows to emerging market economies: A brave new world?," Journal of International Money and Finance, Elsevier, vol. 48(PB), pages 221-248.

    More about this item

    Keywords

    Interest rates ; Monetary policy;

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