Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Are Now Targeting the Whole Yield Curve
In this episode of Monetary Policy Explained, Lucas and Luna dive into a relatively new but powerful tool: yield curve control. They use the Bank of Japan's experience since 2016 as their case study, explaining how a central bank can target not just the short-term policy rate but specific longer-term yields. Lucas walks through the mechanics—how the BoJ commits to buying unlimited ten-year Japanese government bonds at a fixed yield—and why this goes beyond ordinary quantitative easing. They discuss when such a policy makes sense (usually when short rates are already at zero) and the…
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