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Monetary Policy with Flexible Exchange Rates and Foreward Interest Rates as Indicators

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  • Svensson, L.E.O.

Abstract

In the new situation with flexible exchange rates, monetary policy in Europe will have to rely more on indicators than previously under fixed rates. One of the potential indicators, the forward interest rate curve, can be used to indicate market expectations of the time-paths of future short interest rates, monetary policy, inflation rates and currency depreciation rates. The forward rate curve separates market expectations for the short, medium and long term more easily than the standard yield curve. Monetary policy in Germany, France, Sweden, the United Kingdom and the United States is interpreted with the help of forward rates.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Svensson, L.E.O., 1993. "Monetary Policy with Flexible Exchange Rates and Foreward Interest Rates as Indicators," Papers 559, Stockholm - International Economic Studies.
    • Handle: RePEc:fth:stocin:559
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    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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