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Central bank tools for steering short-term interest rates

Abstract : In a context marked by manipulation attempts and by declining money market activity, this paper takes a new look at reference interest rates. More specifically, we discuss the operational tools used by central banks to steer those rates and we compare the operational frameworks of the Federal Reserve in the United States and of the European Central Bank in the euro area. We show how the interest rate corridor has provided a ceiling and a floor to the unsecured overnight interest rate in Europe and how the corridor implemented by the Federal Reserve at the peak of the financial crisis was subsequently adjusted to offer an effective floor to its interbank market, notably through the implementation of an overnight reverse repurchase agreements program.
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https://hal.archives-ouvertes.fr/hal-02985950
Contributor : Isabelle Celet Connect in order to contact the contributor
Submitted on : Monday, November 2, 2020 - 3:42:36 PM
Last modification on : Wednesday, November 3, 2021 - 6:50:13 AM

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Renaud Beaupain, Yann Braouézec. Central bank tools for steering short-term interest rates. Reflets et Perspectives de la vie économique, De Boeck Supérieur, 2017, LVI (4), pp.113 - 123. ⟨10.3917/rpve.564.0113⟩. ⟨hal-02985950⟩

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