MP-Plus: An Overview, April 2013

The combination of exceptionally low policy interest rates and unconventional monetary policy measures are generally referred to as “MP-plus”. These measures include an extended period of very low interest rates as well as so-called unconventional policies—providing long-term liquidity to banks to support the flow of credit, lowering long-term rates through bond purchases, and stabilizing specific markets such as mortgage lending. These measures can be classified into four groups (with some overlap between groups):


Monetary Policy in the New Normal, April 2014

The global financial crisis challenged the existing monetary policy paradigm. Before the crisis, dangerous financial imbalances grew under stable output gaps and low inflation. After the bust, a massive stimulus mitigated the downturn, but could not prevent the deepest recession since the Great Depression, as policy rates rapidly hit the zero lower bound (ZLB), and large swings in capital flows complicated macroeconomic management in small open economies. This has led to an intense discussion about what shape monetary policy should take once economic conditions have settled down into the post-crisis “new normal.” 


Monetary Policy in the New Normal Video Series, April 2014

Can (or should) central banks remain fully independent despite a wider mandate and considerable fiscal pressure? Watch

Must small open economies and emerging market economies use capital flow management measures or FX interventions to retain monetary policy independence? Watch

Should monetary policy have a stability target or lean against the wind? Watch

Should central banks continue to target longer-term bond yields in normal times? Watch

All photography by Jared Chambers