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Does the Sequence Matter: Interest Rates, Quantitative Easing or Forward Guidance?

Author

Listed:
  • Tudor Schlanger

    (Yale School of Management)

  • Lena Suchanek

    (Bank of Canada)

  • Jonathan Swarbrick

    (University of St. Andrews)

  • Joel Wagner

    (Bank of Canada)

  • Yang Zhang

    (Bank of Canada)

Abstract

We study the role of unconventional monetary policies during a pandemic, focusing on the implementation sequencing of policies when there is a social containment period. Using the Bank of Canada’s main projection model (ToTEM), we compare the efficacy of a suite of extended monetary policies (EMPs), finding that the immediate implementation of forward guidance and quantitative easing, followed by credit easing when containment measures are lifted, delivers the best outcome. We also quantify the fiscal response needed to offset the gap in gross domestic product created by the effective lower bound, given operational limitations in scaling up EMPs.

Suggested Citation

  • Tudor Schlanger & Lena Suchanek & Jonathan Swarbrick & Joel Wagner & Yang Zhang, 2026. "Does the Sequence Matter: Interest Rates, Quantitative Easing or Forward Guidance?," International Journal of Central Banking, International Journal of Central Banking, vol. 22(1), pages 1-46, January.
    • Handle: RePEc:ijc:ijcjou:y:2026:q:1:a:1
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