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How Unconventional Monetary Policy Turned Conventional

  • Central banks are doing more than in 2008 to defend economies
  • Negative rates, yield curve control among unorthodox policies
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Ex-Fed Vice Chair Fischer on Inflation, Fed Policy, Inequality
Corrected

Global central bankers are discovering that monetary policies they once viewed as unconventional and temporary are now proving to be conventional and long-lasting.

Forced to think outside the box by the 2008 financial crisis and then again this year by the coronavirus pandemic, the Federal Reserve, European Central Bank and most of their international counterparts have become more aggressive and innovative than ever in defending their economies from recession and the threat of deflation.

Recent months witnessed a return not just of policies first used on a widescale basis following the collapse of Lehman Brothers Holdings Inc., such as quantitative easing, but the adoption of even more esoteric ones.