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Are Unconventional Monetary Policies Effective?

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Executive Summary

This paper evaluates the impact of unconventional and conventional monetary policies in the U.S. on the Libor-OIS spread, long-term interest rates and long-term inflation expectations. To this purpose the authors investigate the behavior of selected asset yields on the days of monetary policy announcements. They find that liquidity facilities other than TAF reduced the three-month Libor-OIS spread. The QE1 purchases of longer-term Treasury securities and agency debt/MBS lowered long-term interest rates. Furthermore, they find evidence that the Fed's rescue operations and QE2 raised long-term inflation expectations.

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