From Crisis Response to Inflation Fight: The World of Unconventional Monetary Policy - Special Episode 16

In this episode we describe how central banks transitioned from using conventional interest rate adjustments to unconventional monetary policies like Quantitative Easing (QE) following the 2008 Global Financial Crisis when interest rates hit the zero lower bound.QE aimed to stabilise markets and stimulate economies by lowering long-term interest rates, but its decade-long use brought mixed results, including concerns about asset price inflation and financial stability.The post-pandemic surge in inflation, a very different challenge from the deflationary fears after 2008, compelled central banks to reverse course by aggressively raising interest rates and initiating Quantitative Tightening (QT), leading to financial strains and a re-evaluation of future monetary policy frameworks.