000319233 001__ 319233
000319233 005__ 20250213115749.0
000319233 0247_ $$2doi$$a10.71609/iheid-9wpf-4h08
000319233 037__ $$aBOOK
000319233 245__ $$aBack to normal? Assessing the effects of the Federal Reserve's Quantitative Tightening
000319233 260__ $$aGeneva$$bGraduate Institute of International and Development Studies, International Economics Department$$c2024
000319233 269__ $$a2024
000319233 300__ $$a72 pages : illustrations
000319233 336__ $$aPapers and Reports
000319233 490__ $$aGraduate Institute of International and Development Studies Working Paper ; no. 14/2024
000319233 520__ $$aWe study the effects of the Federal Reserve's two Quantitative Tightening (QT) programmes implemented over the last decade. We use a high frequency identification strategy to distinguish between conventional monetary policy shocks, Treasury borrowing announcement shocks and the unwinding of the balance sheet. Further, we analyse both QT announcements and operations. Our results show that the Fed was successful in muting the signalling effect of its Balance Sheet Policy (BSP) announcements, as statements not containing quantitative information about QT did not impact significantly asset prices. Conversely, communications disclosing information over the size and the pace of QT had an effect on financial markets. We also find that QT operations have a significant and persistent deflationary effect on interest rates and asset prices. A 1-trillion USD reduction in securities holdings by the Fed is associated with an increase in 10-year Treasury yields by 2 percentage points. While the contractionary effects of QT have so far been at least partially offset by liquidity operations that have expanded the supply of reserves, our results suggest that balance sheet reductions entail in principle strong negative effects on financial markets. Although QT does not represent in the policymakers' view the primary tool to achieve price stability, it is yet far from running quietly in the background of the monetary policy stance.
000319233 6531_ $$aFinance and Investment$$0319126
000319233 700__ $$aCasalena, Francesco
000319233 8564_ $$9d6cb5d32-c5e2-4137-80ec-cbf33054db77$$s4148074$$uhttps://repository.graduateinstitute.ch/record/319233/files/HEIDWP14-2024.pdf
000319233 901__ $$uInternational Economics Department$$0319285
000319233 909CO $$ooai:repository.graduateinstitute.ch:319233$$pGLOBAL_SET$$pIHEID:Explore
000319233 981__ $$aoverwrite