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Monetary Policy Since the Global Financial Crisis

  • Philip Arestis
Chapter
Part of the International Papers in Political Economy book series (IPPE)

Abstract

This chapter focuses on monetary policy since the Global Financial Crisis (GFC), and the subsequent ‘Great Recession’ (GR). In effect, and since the GFC and GR, monetary policy makers have abandoned the main policy instrument that had been around prior to the GFC. The pre-GFC monetary policy had focused on manipulating the rate of interest to achieve an Inflation Target (IT), the only objective of monetary policy, namely price stability. In view of the rate of interest reduced to nearly zero after the GFC, monetary policy makers introduced unconventional means to achieve their ITs, namely, Quantitative Easing (QE) along with very low, near-zero and in some cases negative, interest rates. They also introduced financial stability as a new objective, but IT is still around. We discuss these developments in the case of the main economies, namely the United States, the United Kingdom and the Economic and Monetary Union (EMU).

Keywords

GFC GR IT QE Near-zero/negative interest rates Financial stability Policy coordination 

JEL Classification

E44 E52 E58 E59 

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Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Philip Arestis
    • 1
    • 2
  1. 1.Department of Land EconomyUniversity of CambridgeCambridgeUK
  2. 2.University of the Basque CountryLeioaSpain

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