Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates

In this episode, Lucas and Luna dive into forward guidance—one of the most powerful communication tools central banks have. Using the Federal Reserve's 2013 'taper tantrum' as a cautionary tale, they explain how promises about future policy rates and asset purchases shape financial conditions today. The hosts break down the difference between Delphic and Odyssean guidance, why the Bank of Japan's yield curve control is a form of forward guidance on steroids, and how the ECB tried to anchor expectations with rate path guidance during the pandemic. They also discuss the risks: if central banks commit too strongly, they can lose credibility when conditions change. A must-listen for anyone trying to understand why market reactions often hinge on a single sentence from a central bank chair. #ForwardGuidance #CentralBanks #MonetaryPolicy #FederalReserve #BankOfJapan #ECB #TaperTantrum #YieldCurveControl #OdysseanGuidance #DelphicGuidance #Expectations #Credibility #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #LucasAndLuna #PolicyCommunication Keep every episode free: buymeacoffee.com/fexingo

As of mid-2026, the Federal Reserve has shrunk its balance sheet by over $1.5 trillion from the 2022 peak, and the European Central Bank is accelerating its own unwind. In this episode, Lucas and Luna break down the mechanics of quantitative tightening: how central banks let bonds mature without reinvesting, why the pace matters for money market rates, and what happens when reserves get scarce. They also compare the Fed's cautious approach to the ECB's more aggressive timeline and touch on the Bank of Japan's delicate balancing act. A concrete look at the quiet unwind reshaping global liquidity—no jargon, just the economic plumbing. #QuantitativeTightening #CentralBankBalanceSheet #FederalReserve #EuropeanCentralBank #BankOfJapan #MonetaryPolicy #Economics #Liquidity #Reserves #MoneyMarket #FOMC #ECB #BoJ #TreasurySecurities #MBS #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

In late 2025, the New York Fed's estimate of R-star—the neutral rate of interest—fell to 0.75 percent, the lowest since the pandemic. But what is R-star, and why does it matter? In this episode, Lucas and Luna unpack the theory behind this unobservable variable, from the Laubach-Williams model to the ongoing debate over whether rates are actually as restrictive as they seem. They explore how central banks use the neutral rate in the Taylor rule, why estimates vary so widely, and what a persistently low R-star means for monetary policy going forward. With specific references to Fed dot plots, BIS research, and comparisons with the euro area and Japan, this episode offers a clear, concrete look at the most important number you can't see. #NeutralRate #RStar #MonetaryPolicy #CentralBanks #FederalReserve #TaylorRule #LaubachWilliams #InterestRates #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #Inflation #SoftLanding #BIS #OutputGap #HistoricalRates #UnobservableVariable Keep every episode free: buymeacoffee.com/fexingo

China's digital yuan now reaches over 200 million wallets. But central banks from the Eurozone to Nigeria are racing to build their own digital currencies. In this episode, Lucas and Luna explore how central bank digital currencies could transform monetary policy transmission — from real-time data on spending to negative interest rate capabilities — and what risks lurk beneath the surface, including privacy concerns and the potential for bank disintermediation. They anchor the conversation in the latest pilots from China, Sweden, and the Bahamas, and ask whether CBDCs are really about efficiency or about central banks reclaiming control over the money supply in a digital age. #CBDC #CentralBankDigitalCurrency #DigitalYuan #MonetaryPolicy #DigitalEuro #SwedishEKrona #SandDollar #China #BankForInternationalSettlements #FinancialStability #MonetaryTransmission #Privacy #BankDisintermediation #NegativeInterestRates #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

What formula do central bankers actually consult when setting interest rates? The Taylor Rule, devised by economist John Taylor in 1993, prescribes a policy rate based on inflation, the output gap, and the neutral rate. In this episode, Lucas and Luna unpack how the rule works, why the Federal Reserve pays lip service to it but rarely follows it to the letter, and how its simplicity masks deep disagreements over key inputs like the neutral rate and potential GDP. They walk through real-world applications from the Greenspan era to the post-pandemic tightening cycle, and explore criticisms from both hawks and doves. By the end, you'll understand why the Taylor Rule remains the go-to benchmark for monetary policy — and why it will never be a substitute for judgment. #TaylorRule #CentralBanks #MonetaryPolicy #FederalReserve #InterestRates #InflationTarget #OutputGap #NeutralRate #JohnTaylor #FOMC #Macroeconomics #RuleVsDiscretion #Economics #PolicyRate #Fed #BusinessPodcast #FexingoBusiness #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

In March 2026, the Turkish lira hit a new low after President Erdogan appointed a dovish central bank governor. This episode dives into the theory of central bank independence, why it matters for inflation control, and the political pressures threatening it worldwide. Lucas and Luna explore the time inconsistency problem, the empirical evidence linking independence to lower inflation, and real-world examples from Turkey, Japan, and the United States. They also examine the tension between democratic accountability and the need for technical independence. A must-listen for anyone wondering why central banks often seem to fight against political cycles. #CentralBankIndependence #MonetaryPolicy #Economics #Turkey #Inflation #PriceStability #CentralBanking #FexingoBusiness #BusinessPodcast #Podcast #InterestRates #PoliticalPressure #Erdogan #BankOfJapan #FederalReserve #Credibility #TimeInconsistency #Macroeconomics Keep every episode free: buymeacoffee.com/fexingo

When dollar funding seizes up, central banks don't just watch. They activate swap lines. This episode walks through how the Federal Reserve, the Bank of England, and the European Central Bank use currency swap arrangements to keep global dollar markets functioning. We look at the mechanics—how a swap line actually works, not just the theory—and why the standing swap lines established in 2020 remain a critical tool today. Lucas and Luna also discuss a real 2022 episode where the Bank of Japan used a swap line to calm markets. If you've ever wondered why central banks lend their own currency to each other, this episode lays out the concrete steps and the dollar shortage dynamics that make it necessary. #DollarSwapLines #FederalReserve #BankOfEngland #EuropeanCentralBank #BankOfJapan #DollarFunding #CentralBankCooperation #LiquidityCrisis #SwapLineMechanics #OffshoreDollars #StandingSwapLines #MonetaryPolicy #Economics #FexingoBusiness #BusinessPodcast #CentralBanking #GlobalFinance #MoneyMarkets Keep every episode free: buymeacoffee.com/fexingo

Episode 130 of Monetary Policy Explained with Fexingo. Lucas and Luna dive into the Federal Reserve's overnight reverse repo facility — a once-obscure tool that has become a key indicator of liquidity in the financial system. They explain how the facility works, why its usage surged to over $2 trillion in 2021 and then collapsed to near zero by 2024, and what that reversal signals about bank reserves, money market funds, and the Fed's balance-sheet runoff. Using concrete data from the New York Fed, the hosts connect the reverse repo facility to broader questions about quantitative tightening and the plumbing of short-term funding markets. No jargon without explanation — just clear, focused analysis of one specific central-bank tool and what it tells us right now. #ReverseRepo #FederalReserve #QuantitativeTightening #MoneyMarketFunds #BankReserves #Liquidity #MonetaryPolicy #CentralBanking #OvernightRepo #NewYorkFed #FedBalanceSheet #TreasuryGeneralAccount #RepoMarket #MoneySupply #Economics #FexingoBusiness #BusinessPodcast #MarketStructure Keep every episode free: buymeacoffee.com/fexingo

In episode 129 of Monetary Policy Explained with Fexingo, Lucas and Luna explore why central banks are fixated on the global savings glut — and how it's distorting interest rates, inflation targets, and policy transmission. Using the post-pandemic savings surge as a case study, they explain why excess household liquidity makes rate hikes less effective and why central banks like the Federal Reserve are now tracking savings rates as a leading indicator. The episode dives into data from the U.S. Bureau of Economic Analysis showing that the personal saving rate spiked to 12.3% in 2022 and remains elevated at 7.8% as of Q2 2026, well above the pre-pandemic average of 5.4%. Lucas and Luna discuss how this 'wall of money' dampens the impact of tighter policy, creates a floor under risk assets, and forces central banks to rethink their models. They also touch on the implications for neutral rate estimates and the term premium. #SavingsGlut #CentralBanks #MonetaryPolicy #FederalReserve #InterestRates #PersonalSavingRate #Inflation #Liquidity #NeutralRate #TermPremium #BureauOfEconomicAnalysis #PolicyTransmission #Economics #Macroeconomics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained, Lucas and Luna drill into one of 2026's most debated concepts: the wage-price spiral. They explore whether the classic 1970s-style feedback loop — wages up, prices up, wages up again — is actually re-emerging in today's economy. The specific case? The German public-sector wage deal earlier this year, where unions secured an 8.5 percent increase over 24 months. Lucas breaks down why the European Central Bank is watching that deal closely, how it could feed into services inflation, and what the latest euro-area negotiated wage data — which came in at 4.5 percent year-over-year in Q1 2026 — tells us about the risk. Luna pushes back on the narrative, pointing out that productivity growth and corporate margins complicate the picture. No hot takes, just a careful look at one transmission mechanism central bankers lose sleep over. #WagePriceSpiral #MonetaryPolicy #CentralBanks #ECB #Inflation #GermanWageDeal #ServicesInflation #NegotiatedWages #LaborMarket #Productivity #CorporateMargins #CostPushInflation #DemandPullInflation #WageGrowth #TransmissionMechanism #Economics #Business #FexingoBusiness Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the output gap — the difference between actual GDP and potential GDP — and why central banks are paying closer attention to it in mid-2026. They break down why the output gap matters for inflation forecasting, how it's measured (production function vs. statistical filters), and why the Federal Reserve and ECB are debating its current size. Specific focus on how a negative output gap in the eurozone is complicating the ECB's tightening stance, and why some Fed officials think the U.S. output gap may be narrower than models suggest. Lucas explains the concept with a concrete example from the 2020-2023 inflation surge, and Luna challenges whether the output gap is too backward-looking to guide forward policy. No jargon for jargon's sake — just a clear, timely look at an under-discussed economic metric. #OutputGap #CentralBanks #MonetaryPolicy #Economics #FederalReserve #ECB #Inflation #GDP #PotentialGDP #ProductionFunction #HodrickPrescott #PhillipsCurve #MonetaryPolicyExplained #FexingoBusiness #BusinessPodcast #Macroeconomics #2026 #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo

Episode 126 of Monetary Policy Explained with Fexingo: Lucas and Luna break down the term premium — the extra yield investors demand for holding long-term bonds — and why central banks from the Fed to the ECB are obsessing over it in mid-2026. They walk through the term premium's rise from negative territory during quantitative easing to about 40 basis points today, using the ten-year US Treasury as the anchor case. Lucas explains how the term premium signals bond market stress, fiscal confidence, and the limits of rate policy, while Luna pushes on whether the term premium is a reliable predictor or just a residual. They cover the decomposition models from the New York Fed, the role of QT and fiscal deficits, and what a term premium above 50 basis points would mean for the neutral rate. No jargon for jargon's sake — just a clear, concrete explanation of one of the most quietly important numbers in macro finance. #TermPremium #CentralBanks #BondMarket #TreasuryYields #QuantitativeTightening #FederalReserve #ECB #MonetaryPolicy #NeutralRate #FiscalPolicy #YieldCurve #MacroFinance #Economics #LucasAndLuna #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #BondInvesting Keep every episode free: buymeacoffee.com/fexingo

Central banks rarely say it out loud, but deliberately weakening the exchange rate is one of their oldest tools. In this episode, Lucas and Luna unpack competitive devaluation — why the Bank of Japan leaned into yen weakness through 2024 and 2025, how the Swiss National Bank capped the franc for years, and what happens when every central bank tries to devalue at once. They walk through the specific mechanics: selling reserves, setting negative rates, and using forward guidance to signal a weaker currency. They also explore the limits — the point where devaluation stops helping exports and starts hurting consumers via higher import prices. A focused look at the strategy central banks use most but talk about least. #CentralBanking #CurrencyDevaluation #CompetitiveDevaluation #BankOfJapan #SwissNationalBank #YenWeakness #FrancCapping #NegativeRates #ForexReserves #ExportStrategy #ImportPrices #MonetaryPolicy #ExchangeRates #YieldCurveControl #CarryTrade #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo

In Episode 124 of Monetary Policy Explained with Fexingo, Lucas and Luna explore how central banks rely on inflation expectations surveys — from the University of Michigan Survey of Consumers to the Survey of Professional Forecasters. They discuss why the Federal Reserve watches the 5-year-5-year-forward breakeven rate, how expectations became de-anchored in the 1970s, and what the latest July 2026 data signals for the Fed's next move. The conversation also covers the difference between household and professional expectations, and how the ECB uses its Consumer Expectations Survey. Packed with real examples and practical insights for anyone following monetary policy. #InflationExpectations #CentralBanks #FederalReserve #UniversityOfMichiganSurvey #SurveyOfProfessionalForecasters #MonetaryPolicy #BreakevenRate #ECB #ConsumerExpectations #Episode124 #MonetaryPolicyExplained #FexingoBusiness #BusinessPodcast #Economics #Inflation #FedPolicy #PhillipsCurve #Anchoring Keep every episode free: buymeacoffee.com/fexingo

Today, Lucas and Luna explore how central banks incorporate the Shapiro-Stiglitz efficiency wage model into their understanding of labor markets and inflation. The model suggests that firms pay above-market-clearing wages to reduce shirking, creating involuntary unemployment even in equilibrium. Lucas explains how this framework helps central banks interpret the non-accelerating inflation rate of unemployment (NAIRU) and why wage-setting behavior matters for policy. They discuss a 2025 Bank of England working paper that used efficiency wage theory to explain persistent post-pandemic labor tightness in the UK. The hosts also touch on how the model interacts with the Phillips curve and what it means for the current rate-setting environment in mid-2026. Concrete example: the UK's unusually low labor force participation rate among older workers and how efficiency wages might be keeping wages sticky. The episode closes with a reflection on how microfoundations shape macro policy decisions. #ShapiroStiglitz #EfficiencyWage #CentralBanks #LaborMarket #NAIRU #PhillipsCurve #MonetaryPolicy #BankOfEngland #InvoluntaryUnemployment #WageSetting #Inflation #LaborTightness #Macroeconomics #Economics #FexingoEconomics #FexingoBusiness #BusinessPodcast #Podcast Keep every episode free: buymeacoffee.com/fexingo

In Episode 122 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the central bank discount window—a tool that lets banks borrow overnight in emergencies. They walk through how the Federal Reserve's discount rate works, why stigma kept banks away from it during the 2008 crisis, and how the Fed redesigned the window after the Silicon Valley Bank collapse in 2023. Lucas explains the difference between primary and secondary credit, why the discount rate is set above the federal funds rate target, and how modern central banks are trying to normalize its use. The hosts also discuss recent data: as of mid-2026, discount window borrowing has averaged about $500 million per night, well below the $150 billion peak during SVB's failure. They debate whether the stigma has truly faded or if banks still fear the reputational hit. A must-listen for anyone curious about the plumbing of monetary policy. #DiscountWindow #CentralBanking #FederalReserve #MonetaryPolicy #BankLiquidity #PrimaryCredit #SecondaryCredit #SiliconValleyBank #BankingCrisis #OvernightLending #Stigma #LenderOfLastResort #FederalFundsRate #BankReserves #FinancialStability #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo

Episode 121 of Monetary Policy Explained with Fexingo dives into the loan-to-deposit ratio (LDR) and why central banks monitor it as a signal of bank funding stability. Lucas and Luna unpack a real example from the 2023 regional banking crisis in the US, where high LDRs at Silicon Valley Bank and First Republic signaled vulnerability to deposit runs. They explain how the LDR connects to the money multiplier, reserve requirements, and why a ratio above 100% means a bank is funding loans with wholesale borrowing. The conversation also touches on how central banks like the People's Bank of China use LDR caps, and what the metric means for the current interest rate environment in July 2026. A concrete, numbers-driven look at a tool that often flies under the radar. #LoanToDepositRatio #CentralBanks #BankFunding #MonetaryPolicy #SiliconValleyBank #FirstRepublic #RegionalBanking #MoneyMultiplier #ReserveRequirements #WholesaleFunding #DepositRun #PBOC #ChinaLDR #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #LDR Keep every episode free: buymeacoffee.com/fexingo

Episode 120 of Monetary Policy Explained with Fexingo dives into the credit impulse – the change in new credit creation relative to GDP. Lucas and Luna unpack why the Bundesbank and the Bank of Japan are tracking this leading indicator, using a concrete example from Germany: a sharp drop in the credit impulse in late 2025 preceded a 0.3% GDP contraction in Q1 2026. They explain how the credit impulse differs from total debt levels, why it tends to lead economic turning points by two to four quarters, and how central banks factor it into policy decisions. The hosts also touch on the Bank of Japan's recent uptick in credit issuance as a potential signal of recovery. With real data and a clear walkthrough, this episode gives listeners a practical lens for reading economic momentum before official GDP numbers land. No fluff, just the mechanism. #CreditImpulse #CentralBanks #MonetaryPolicy #Bundesbank #BankOfJapan #EconomicIndicators #LeadingIndicators #GDP #CreditCreation #MoneySupply #Macroeconomics #BusinessCycle #LucasAndLuna #FexingoBusiness #BusinessPodcast #EconomicsExplained #MonetaryPolicyExplained #Episode120 Keep every episode free: buymeacoffee.com/fexingo

Lucas and Luna explore why central banks are increasingly focused on bank funding costs as a leading indicator of financial stability and monetary policy transmission. Using the 2023 regional banking turmoil as a reference point, they examine how the spread between bank deposit rates and risk-free rates has narrowed, squeezing net interest margins and signaling potential credit tightening. The hosts discuss how the Federal Reserve now monitors the Bank Funding Cost Index from the Office of Financial Research, and how the European Central Bank tracks the pass-through of rate hikes to bank lending rates via the Bank Lending Survey. They also touch on the Bank of England's focus on the Sterling Overnight Index Average (SONIA) as a benchmark for funding costs. The episode concludes by considering whether central banks should incorporate funding stress indicators into their policy reaction functions. This episode is perfect for economics enthusiasts who want to understand the plumbing between central bank policy and bank behavior. #CentralBanks #MonetaryPolicy #BankFundingCosts #FinancialStability #NetInterestMargin #FederalReserve #EuropeanCentralBank #BankOfEngland #OfficeOfFinancialResearch #SONIA #BankLendingSurvey #RegionalBankingCrisis #PolicyTransmission #FundingStressIndicator #InterestRateRisk #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo

Episode 118 of Monetary Policy Explained with Fexingo dives into the history and mechanics of inflation targeting, using the Reserve Bank of New Zealand's 1989 pioneering move as the anchor. Lucas and Luna explore why central banks picked the 2 percent target, how it was exported globally via the Maastricht Treaty and the Bank of England's 1992 adoption, and whether the framework is showing its age in the post-pandemic era. They discuss the role of the Taylor Rule in formalizing targeting, the flexibility of average inflation targeting (AIT) adopted by the Federal Reserve in 2020, and the practical challenges of setting a single number for a complex economy. With insights on the European Central Bank's definition of price stability and the Bank of Japan's struggle with deflation, this episode gives listeners a concrete understanding of how the inflation target shapes everything from mortgage rates to wage negotiations. If you've ever wondered why 2 percent is the magic number, this is your explainer. #InflationTargeting #CentralBanks #MonetaryPolicy #ReserveBankOfNewZealand #FederalReserve #EuropeanCentralBank #BankOfJapan #TaylorRule #AverageInflationTargeting #MaastrichtTreaty #PriceStability #Deflation #TwoPercentTarget #Economics #FexingoBusiness #BusinessPodcast #LucasAndLuna #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

Central banks monitor labor market tightness via the ratio of job vacancies to unemployed workers. This episode dives into the specifics: the JOLTS data, the Beveridge curve, and the recent flattening. As of mid-2026, the U.S. vacancy-to-unemployment ratio has fallen from its 2022 peak of 2-to-1 to about 1.2-to-1, but remains above pre-pandemic levels. Lucas and Luna discuss why the Fed focuses on this metric, how it influences wage growth and inflation, and what the current flattening of the Beveridge curve implies for a soft landing. They also touch on the Bank of England's similar focus and the ECB's labor cost tracker. #CentralBanks #LaborMarketTightness #BeveridgeCurve #JOLTS #FederalReserve #BankOfEngland #ECB #WageGrowth #Inflation #SoftLanding #VacancyToUnemploymentRatio #MonetaryPolicy #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #LucasAndLuna #LaborEconomics Keep every episode free: buymeacoffee.com/fexingo

Episode 116 of Monetary Policy Explained with Fexingo dives into the Liquidity Coverage Ratio — the post-2008 rule that forces banks to hold enough high-quality liquid assets to survive a 30-day stress scenario. Lucas and Luna walk through how the LCR reshaped bank balance sheets, why it matters for money markets, and what happens when central banks tighten policy in a world where banks must hoard Treasuries. They anchor the discussion to the 2023 banking turmoil and the 2026 rate environment, using data from the Fed's discount window and money market fund flows. A concrete look at how a regulatory ratio became a transmission mechanism for monetary policy. #LiquidityCoverageRatio #LCR #CentralBanks #MonetaryPolicy #BankRegulation #BaselIII #HQLA #Treasuries #MoneyMarkets #DiscountWindow #BankingTurmoil #FederalReserve #LiquidityRisk #30DayStress #RepoMarket #FexingoBusiness #BusinessPodcast #Economics Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained, Lucas and Luna dig into the money supply curve: what it is, why central banks care about it, and how it shapes policy decisions. Using the real-world example of the ECB's October 2025 recalibration of its liquidity operations, they explain the difference between the vertical and upward-sloping views of the money supply curve and what recent balance-sheet runoff data tells us about which model central banks actually follow. Listeners will learn how the money supply curve helps predict whether a rate hike or quantitative tightening will have a bigger impact on inflation — and why the Fed and ECB are now paying closer attention to the slope of that curve as they navigate the post-pandemic liquidity landscape. #MoneySupplyCurve #CentralBanks #ECB #FederalReserve #MonetaryPolicy #Liquidity #QuantitativeTightening #BalanceSheetRunoff #ReserveSupply #InterestRatePolicy #Economics #FexingoBusiness #BusinessPodcast #LucasAndLuna #MonetaryEconomics #CentralBankToolkit #MoneyMarkets #PolicyTransmission Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the concept of the neutral rate of interest—often called R-star. They explore why central banks are currently scrutinizing the neutral rate more than ever in July 2026, as the post-pandemic economy reshapes estimates. The hosts break down how the neutral rate is estimated using models from Laubach and Williams, and the Holston-Laubach-Williams approach, referencing specific data from the New York Fed and the San Francisco Fed. They discuss why the neutral rate has been declining since the 1980s, factors like aging demographics and productivity slowdowns, and whether the pandemic has pushed R-star higher. The episode also examines how central banks use the neutral rate as a benchmark for whether monetary policy is accommodative or restrictive. Lucas and Luna unpack the uncertainty around these estimates and why policymakers must navigate with humility. A must-listen for anyone wanting to understand the invisible compass guiding interest rate decisions. #NeutralRate #RStar #CentralBanks #MonetaryPolicy #InterestRates #FederalReserve #LaubachWilliams #HolstonLaubachWilliams #NewYorkFed #SanFranciscoFed #Productivity #Demographics #Inflation #PostPandemic #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna dig into R-star — the neutral rate of interest — and why it matters more than ever in mid-2026. They use the recent Federal Reserve Summary of Economic Projections as a case study, showing how the median longer-run fed funds rate estimate has drifted upward since pre-pandemic levels. Lucas explains how neutral rate estimates inform rate decisions, why they are unobservable and model-dependent, and what a higher R-star implies for the economy. Luna pushes back on the reliability of these estimates, noting the wide confidence intervals. The conversation also touches on the debate between secular stagnation and persistent fiscal stimulus as drivers of R-star. A focused, accessible look at one of central banking's most important — and most elusive — concepts. #RStar #NeutralRate #FederalReserve #MonetaryPolicy #CentralBanking #InterestRates #EconomicForecasting #FedSEP #LucasAndLuna #FexingoBusiness #BusinessPodcast #Economics #Macroeconomics #SecularStagnation #FiscalStimulus #LongRunRate #RateDecisions #Investing Keep every episode free: buymeacoffee.com/fexingo

In this episode, Lucas and Luna explore how central banks use the Phillips curve to gauge the trade-off between inflation and unemployment. They break down why the curve has flattened over the past two decades, using the U.S. experience from the 1970s to today as a case study. The conversation digs into the breakdown of the traditional relationship after the 2008 financial crisis, the role of anchored inflation expectations, and how the Federal Reserve still relies on a modified version of the curve for policy decisions. Lucas explains the concept of the 'non-accelerating inflation rate of unemployment' (NAIRU) and why it's become harder to estimate. Luna challenges the reliability of the Phillips curve in a low-inflation world, citing data from the 2010s when unemployment fell well below NAIRU estimates without triggering inflation. The episode also touches on recent research about the curve's potential re-emergence after the pandemic, and what that means for central bank credibility. A clear, conversational look at one of macroeconomics' most debated relationships. #PhillipsCurve #CentralBanks #Inflation #Unemployment #MonetaryPolicy #FederalReserve #NAIRU #Macroeconomics #LaborMarket #InflationExpectations #Economics #BusinessPodcast #FexingoBusiness #Fexingo #Podcast #InterestRates #WageGrowth #EconomicData Keep every episode free: buymeacoffee.com/fexingo

Episode 111 of Monetary Policy Explained with Fexingo. Lucas and Luna dive into the world of overnight index swaps, or OIS. They explain how the OIS rate strips out credit risk, making it a pure measure of expected central bank policy rates. Using the June 2026 FOMC meeting as a concrete anchor, they walk through how traders and policymakers parse the OIS curve to gauge rate expectations, and why a 75-basis-point gap between the fed funds rate and OIS signaled market stress in March 2020. They also compare OIS to the Secured Overnight Financing Rate (SOFR) and show how swap spreads reveal hidden liquidity fears. No fluff, no intro — just a clear, specific breakdown of a tool that central bankers watch daily. Plus a brief, sincere moment about why Fexingo keeps these shows ad-free and listener-supported. #OvernightIndexSwaps #CentralBanking #OIS #FedFundsRate #FOMC #SOFR #SwapSpreads #MonetaryPolicy #InterestRateExpectations #LiquidityRisk #MarketStress #Economics #Finance #FexingoBusiness #BusinessPodcast #PodcastEpisode #Episode111 #PolicyTools Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained, Lucas and Luna dive into an often-overlooked but powerful tool in the central bank toolkit: reserve requirements. While many assume reserve requirements are a relic of the past, they are quietly making a comeback in places like China and emerging markets. The hosts unpack how reserve requirements interact with interest on reserves and quantitative easing, using the People's Bank of China's recent adjustments as a concrete case study. They explain why the Federal Reserve and European Central Bank rarely use this tool today, yet why it remains a potent signal in economies with less developed financial systems. Lucas breaks down the mechanics of how changing reserve requirements affects the money multiplier, lending capacity, and short-term interest rates. The episode also explores how reserve requirements have evolved since the 2008 financial crisis and what their current usage tells us about the state of monetary policy globally. A must-listen for anyone trying to understand the full range of central bank tools beyond just interest rate decisions. #ReserveRequirements #CentralBanks #MonetaryPolicy #PeopleBankOfChina #MoneyMultiplier #InterestOnReserves #QuantitativeEasing #FederalReserve #EuropeanCentralBank #EmergingMarkets #LendingCapacity #ChinaMonetaryPolicy #FexingoBusiness #BusinessPodcast #Economics #BankingSystem #FinancialStability #PolicyTools Keep every episode free: buymeacoffee.com/fexingo

Episode 109 of Monetary Policy Explained with Fexingo. Lucas and Luna drill into one of central banking's most maddening puzzles: the pass-through of policy rates to the real economy. They trace the journey from a rate hike announcement—say, 25 basis points from a major central bank in mid-2026—through bank funding costs, lending spreads, and ultimately to a small business owner's loan renewal. Luna highlights a 2024 study showing that in the euro area, only 40 percent of a rate change hits bank lending rates within one quarter, while in the U.S. the figure is closer to 70 percent. Lucas explains why the 'stickiness' differs: fixed-rate mortgages lengthen the transmission belt, floating-rate debt speeds it up, and banks' net interest margins buffer the shock. They also touch on how non-bank lenders and securitisation have changed the pass-through dynamics post-2023, and why the Bank of England now watches a 'pass-through gauge' in its quarterly Monetary Policy Report. A concrete, numbers-driven look at why monetary policy doesn't always work as fast as the textbooks say. #MonetaryPolicy #CentralBanks #PassThrough #InterestRates #FederalReserve #ECB #BankOfEngland #LendingRates #TransmissionMechanism #NetInterestMargin #MonetaryTransmission #FixedRateMortgages #FloatingRateDebt #NonBankLending #Securitization #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained, Lucas and Luna break down how central banks use forward rate agreements — specifically Overnight Indexed Swaps — to extract market-implied policy expectations. They look at the Bank of England's 2023-2024 experience as a case study, showing how the wedge between SONIA swap rates and actual Bank Rate revealed whether markets believed the central bank's tightening cycle. Lucas walks through a concrete example: in September 2023, OIS pricing implied a peak Bank Rate of 5.5%, while the MPC had only guided to 5.25% — a 25 basis point gap that signaled credibility issues. Luna brings in the ECB's use of €STR OIS during the 2022 rate hiking cycle to compare approaches. The hosts discuss why central banks care about FRAs: they provide high-frequency, forward-looking data on where the market thinks policy is headed, which can either validate or challenge the central bank's own guidance. They also touch on the limitations — liquidity in longer-dated FRAs and the influence of term premia. The episode closes with a natural, topic-tied donation segment asking listeners to support the ad-free show. #MonetaryPolicy #CentralBanks #ForwardRateAgreements #OvernightIndexedSwaps #SONIA #ESTR #BankOfEngland #ECB #InterestRates #PolicyExpectations #MarketImpliedRates #TighteningCycle #MonetaryPolicyTransmission #CentralBankCommunication #Economics #FexingoEconomics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo

Episode 107 of Monetary Policy Explained with Fexingo. Lucas and Luna explore the Monetary Conditions Index (MCI), a composite indicator that blends interest rates and exchange rates to gauge overall policy tightness. They dive into how the Bank of Canada pioneered the MCI in the 1990s, why the Reserve Bank of New Zealand still tracks it today, and how the concept resurfaced in 2025-2026 as central banks juggle rate cuts with currency depreciation. Lucas explains the formula: a 100-basis-point rate cut equals roughly a 5% currency weakening in impact. Luna questions whether the MCI works in a world of zero lower bounds and quantitative easing. They also discuss how the European Central Bank and emerging market central banks use informal MCIs to set policy. A concrete look at an under-the-radar central bank tool that ties together two key transmission channels. #MonetaryConditionsIndex #CentralBanks #MonetaryPolicy #InterestRates #ExchangeRates #BankOfCanada #ReserveBankOfNewZealand #EuropeanCentralBank #Economics #PolicyTransmission #FinancialConditions #Currency #RateCuts #Tightening #LucasAndLuna #FexingoBusiness #BusinessPodcast #Macroprudential Keep every episode free: buymeacoffee.com/fexingo

Episode 106 of Monetary Policy Explained with Fexingo. Lucas and Luna dive into the little-discussed concept of structural versus cyclical budget deficits and how central banks factor them into monetary policy. Using Canada's 2024–2026 federal budget as a case study, they break down why the Bank of Canada pays attention to the cyclically adjusted balance, how a high structural deficit can complicate interest rate decisions, and what the 'fiscal path' signals mean for inflation and the neutral rate. The hosts also touch on how markets interpret government spending commitments when central banks are trying to cool demand. No jargon overload—just a clear look at an often-overlooked input on the monetary policy dashboard. #StructuralDeficit #CyclicalDeficit #CentralBanks #BankOfCanada #MonetaryPolicy #FiscalPolicy #BudgetDeficit #Inflation #NeutralRate #Economics #CanadaBudget #FiscalDominance #GovernmentSpending #InterestRates #MonetaryPolicyExplained #FexingoBusiness #BusinessPodcast #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo

Episode 105 of Monetary Policy Explained with Fexingo dives into the output gap — the difference between actual and potential GDP — and how central bankers use it to calibrate interest rates. Lucas and Luna break down the concept using the U.S. economy in mid-2026, where estimates suggest the output gap has narrowed to roughly 0.5 percent of GDP after a period of above-trend growth. They discuss how the Federal Reserve and other central banks rely on output gap estimates from institutions like the Congressional Budget Office, the uncertainty around measuring potential output, and why a small positive gap can trigger rate hikes even if inflation looks contained. The episode also touches on how the output gap interacts with concepts like the Taylor Rule and r-star, without rehashing prior episodes. Perfect for listeners who want to understand the real-time data points that shape monetary policy decisions. #OutputGap #MonetaryPolicy #CentralBanks #FederalReserve #PotentialGDP #TaylorRule #RStar #CBOMeasurements #RateHikes #EconomicGrowth #Inflation #GDP #BusinessCycle #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #MacroEconomics Keep every episode free: buymeacoffee.com/fexingo

In Episode 104 of Monetary Policy Explained with Fexingo, Lucas and Luna dig into why central banks are paying close attention to housing affordability ratios as a leading indicator for financial stability and inflation. They explore the link between the ratio of median home price to median income and the delayed transmission of higher interest rates to shelter costs in inflation indices. The hosts discuss a specific metric: the National Association of Realtors Housing Affordability Index, which fell to its lowest level since the mid-1980s in 2024, and how that data point shapes central bank thinking on rate policy, mortgage credit, and rent inflation. Lucas walks through the two-channel effect — how affordability-driven rent displacement feeds into Owners' Equivalent Rent and how declining home sales eventually slow services inflation. Luna challenges whether central banks can credibly target housing costs without direct tools, and whether the Fed's 2025-2026 rate-hold reflects this data more than core PCE. A concrete episode for anyone following the housing-market loop in monetary transmission. #HousingAffordability #CentralBanks #MonetaryPolicy #FederalReserve #Inflation #OwnersEquivalentRent #ShelterCosts #MortgageRates #NationalAssociationOfRealtors #HousingAffordabilityIndex #NeutralRate #FinancialStability #RentInflation #RatePolicy #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna take a deep dive into the Taylor Rule—the simple formula central bankers use to set interest rates based on inflation and output gaps. Using the current mid-2026 environment as a backdrop, they explain how the rule works, why it's been controversial since the 2007-2009 financial crisis, and how the Federal Reserve has adapted it over time. They walk through a concrete example: if inflation is 3% and the output gap is -1%, what should the policy rate be? They also discuss the limitations of the rule, from the zero lower bound to the r-star problem. The episode touches on John Taylor's original 1993 paper, the 1990s 'Taylor Rule era,' and why central bankers now treat the rule as a guide rather than a rigid formula. Listeners will come away understanding one of the most important concepts in modern monetary economics and how it shapes the rates on their mortgages and savings accounts. #TaylorRule #MonetaryPolicy #CentralBanks #FederalReserve #JohnTaylor #InterestRates #InflationTargeting #OutputGap #RStar #ZeroLowerBound #Economics #Macroprudential #FOMC #Fed #RuleBasedPolicy #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

Episode 102 of Monetary Policy Explained with Fexingo dives into SOFR, the secured overnight financing rate that has replaced LIBOR as the benchmark for trillions in derivatives and loans. Lucas and Luna explain how SOFR is calculated from actual overnight Treasury repo transactions, why it behaves differently from the old unsecured rates, and what its recent movements imply about liquidity in the banking system. Using the June 2026 quarter-end spike in SOFR as a concrete case, they explore why central banks pay close attention to secured rates for signs of collateral scarcity and funding stress. The hosts also touch on how the shift from LIBOR to SOFR has changed the economics of floating-rate mortgages and corporate loans, and what a persistently elevated SOFR spread might signal for policy. A must-listen for anyone wanting to understand the plumbing behind interest rates. #SOFR #SecuredOvernightFinancingRate #LIBORTransition #CentralBanking #MonetaryPolicy #InterestRates #RepoMarket #CollateralScarcity #FundingStress #BenchmarkRates #Economics #FexingoBusiness #BusinessPodcast #LucasAndLuna #TreasuryMarket #Liquidity #OvernightRates #Fed Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the term spread — the difference between short-term and long-term interest rates — and why central banks are watching it closely in mid-2026. They explain how a steepening or flattening term spread signals shifts in market expectations for growth, inflation, and policy. Using the current environment as context, they discuss what the spread between the two-year and ten-year Treasury says about investor anxiety, liquidity conditions, and the effectiveness of quantitative tightening. Lucas breaks down the mechanics of the term premium and how it differs from the yield curve slope. Luna pushes back on whether the term spread is still a reliable signal in an era of central bank balance sheet manipulation. The episode ends with a reflection on whether markets are pricing in a soft landing or a policy mistake. Packed with specific numbers and a clear framework, this episode gives listeners a concrete lens for reading bond market signals. #TermSpread #CentralBanks #MonetaryPolicy #YieldCurve #BondMarket #Treasuries #TermPremium #QuantitativeTightening #InterestRates #FinancialMarkets #Economics #FexingoBusiness #BusinessPodcast #LucasAndLuna #MarketStress #Liquidity #SoftLanding #PolicyMistake Keep every episode free: buymeacoffee.com/fexingo

For episode 100 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into one of the most powerful yet underappreciated tools central bankers use to read the economy: the Senior Loan Officer Opinion Survey, or bank lending survey. Instead of guessing what banks are doing, central banks ask them directly. Lucas breaks down how the Federal Reserve's quarterly survey captured tightening credit standards in 2023 before GDP data showed any slowdown, and how the ECB's 2024 survey revealed a dramatic drop in loan demand that foreshadowed the eurozone's mild recession. Luna pushes back on whether surveys can truly be leading indicators given banks' tendency to overstate caution. The episode closes with a forward look at why the July 2026 survey might be especially revealing as commercial real estate stress mounts. One concrete takeaway: the net percentage of banks tightening standards has historically led changes in business investment by two to three quarters. #CentralBanks #BankLendingSurvey #MonetaryPolicy #FederalReserve #ECB #SeniorLoanOfficer #CreditConditions #LoanDemand #LeadingIndicators #RecessionSignals #Economics #FexingoBusiness #BusinessPodcast #CommercialRealEstate #CreditCrunch #TighteningStandards #Liquidity #Macroprudential Keep every episode free: buymeacoffee.com/fexingo

In episode 99 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the secretive world of currency intervention. Central banks don't just set interest rates—they occasionally step directly into foreign exchange markets to influence their currency's value. Using recent examples like Japan's yen-buying operations in 2024-2025 and Brazil's real rally in early 2026, the hosts break down how these interventions work, when they succeed, and why many fail. You'll learn about sterilized vs. unsterilized intervention, the trillion-dollar pool of foreign reserves, and why the Bank of Japan spent over $100 billion in a single quarter without halting the yen's decline. A must-listen for anyone puzzled by headlines about 'intervention zones' or 'oral intervention.' #CurrencyIntervention #CentralBanks #BankOfJapan #FederalReserve #YenIntervention #ForexReserves #SterilizedIntervention #BrazilReal #SantiagoExchangeRate #CarryTrade #ForeignExchange #MonetaryPolicy #Economics #FexingoBusiness #BusinessPodcast #PolicyTools #MacroEconomics #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo

Episode 98 of Monetary Policy Explained with Fexingo. Lucas and Luna explore how central banks extract inflation expectations from market prices, focusing on the five-year, five-year forward breakeven inflation rate. They walk through the mechanics of nominal versus inflation-indexed bond yields, explain why the breakeven rate isn't a perfect forecast but a powerful signal, and discuss what recent data says about credibility and anchoring. Along the way they touch on the role of inflation risk premiums, the difference between compensation and expectation, and why central bankers watch this specific measure rather than just survey data. A practical look at one of the most closely watched indicators in monetary policy today. #MonetaryPolicy #CentralBanks #InflationExpectations #BreakevenRate #TIPS #RealYields #NominalYields #ForwardRates #FiveYearFiveYearForward #InflationRiskPremium #MarketPricing #FederalReserve #ECB #BankOfEngland #PolicyCredibility #BondMarkets #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo

Lucas and Luna drill into the expectations channel — how central banks influence the economy not through rate changes alone, but by shaping what people think the future holds. They use the Bank of Japan's 2016 yield curve control announcement and the Federal Reserve's 2022 forward guidance pivot as concrete cases. Lucas explains the academic theory from Michael Woodford's 'Interest and Prices', and Luna pushes back on whether it works when credibility is low. Specific numbers: the 10-year JGB yield target of zero percent, and the 50-basis-point gap between the Fed's dot plot projections and market pricing in mid-2022. No vague abstractions — just how central bankers talk about talking. #CentralBanks #MonetaryPolicy #ExpectationsChannel #BankOfJapan #FederalReserve #ForwardGuidance #YieldCurveControl #InterestRates #MichaelWoodford #Economics #Macroeconomics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #PolicyTransmission #Credibility #InflationExpectations Keep every episode free: buymeacoffee.com/fexingo

In this episode, Lucas and Luna dig into the renewed central bank focus on the wage-price spiral in mid-2026. With labour markets still tight and services inflation sticky, policymakers worry that persistent wage growth could feed a self-reinforcing loop. Lucas explains the historical context—the 1970s experience and how it differs today—and walks through the specific data points the Fed, ECB, and Bank of Japan are watching: the Atlanta Wage Tracker, unit labour costs, and productivity figures. Luna raises the counterargument that profit margins and supply chains matter more, and Lucas breaks down why central banks still see wages as the key transmission mechanism. The episode closes on the question of whether today's institutional credibility makes a full spiral unlikely, but warns that the risk isn't zero. Specific and grounded, this episode helps listeners understand one of the most debated concepts in monetary policy today. #WagePriceSpiral #CentralBanks #MonetaryPolicy #Inflation #FederalReserve #ECB #BankOfJapan #AtlantaWageTracker #UnitLabourCosts #Productivity #LabourMarket #ServicesInflation #1970s #PhillipsCurve #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained Keep every episode free: buymeacoffee.com/fexingo

Central banks have a new emergency tool that doesn't wait for a crisis. Lucas and Luna explain the Standing Repo Facility — a permanent backstop for overnight lending that the Fed introduced in 2021 and other central banks are now adopting. They walk through how the facility works in practice, why it replaces the ad-hoc repo operations of September 2019, and what it means for bank liquidity, money market functioning, and the transmission of monetary policy. Specific focus on the New York Fed's Standing Repo Facility usage data through mid-2026, and the Bank of England's parallel Sterling Monetary Framework reforms. No hype, just the mechanics. #StandingRepoFacility #FederalReserve #BankOfEngland #RepoMarket #OvernightLending #Liquidity #MoneyMarket #MonetaryPolicy #CentralBank #NewYorkFed #SterlingMonetaryFramework #Banking #FixedIncome #Economics #FexingoBusiness #BusinessPodcast #FinancialSystem #Macro Keep every episode free: buymeacoffee.com/fexingo

Episode 94 dives into tiered reserve remuneration, the monetary policy tool central banks deploy to balance rate hikes with bank profitability. Lucas explains how the Bank of England's 2022-2023 tiering helped UK lenders weather higher rates without crashing lending, while Luna points out why the European Central Bank's similar system didn't trigger the same debate. They break down the mechanism, the tradeoffs, and whether tiering could return if liquidity conditions tighten. A focused look at a wonky but critical policy lever—with real numbers and real consequences. #TieredReserveRemuneration #CentralBanking #MonetaryPolicy #BankOfEngland #EuropeanCentralBank #ReserveTiering #BankProfitability #InterestOnReserves #LiquidityManagement #Economics #Business #Finance #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #CentralBanks #RateHikes #BankingSector Keep every episode free: buymeacoffee.com/fexingo

Episode 93 of Monetary Policy Explained with Fexingo. Lucas and Luna drill into the zero lower bound on interest rates — a concept that seemed obsolete after 2015 but is suddenly relevant again as several advanced economies flirt with near-zero policy rates in mid-2026. They use the Bank of Japan's experience as the central case, showing how Japan spent nearly a decade at the ZLB before moving to yield curve control, and why the ECB and Federal Reserve are now studying that playbook. The episode walks through the mechanics of the ZLB (why rates can't go much below zero without breaking the banking system), the 'reversal rate' theory from Stanford's Markus Brunnermeier, and how the Fed's 2026 review of its monetary policy framework is quietly grappling with this constraint. Specific numbers: the Bank of Japan's policy rate has been at -0.1 percent since 2016; the ECB's deposit rate is currently at 0 percent; the fed funds rate is at 0.75 percent. Listeners come away understanding why central bankers suddenly sound worried about a problem they thought they'd solved. #ZeroLowerBound #CentralBanks #MonetaryPolicy #BankOfJapan #FederalReserve #ECB #InterestRates #NegativeRates #ReversalRate #MarkusBrunnermeier #YieldCurveControl #PolicyRate #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #LucasAndLuna #Macroprudential Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained, Lucas and Luna dive into why central banks are increasingly focused on the labor force participation rate (LFPR) as a key indicator for inflation and policy decisions. Using the post-pandemic recovery as a case study, they explore how shifts in participation—especially among prime-age workers—affect wage pressures, potential output, and the neutral rate of interest. Lucas breaks down the surprising rebound in U.S. prime-age participation from 81.5% in early 2020 to over 83% by mid-2025, while Luna questions whether structural factors like aging demographics will cap further gains. They discuss how the Federal Reserve and other central banks now model participation trends to avoid premature tightening or easing, and why this metric matters more than ever in a tight labor market. A must-listen for anyone wanting to understand the hidden dynamics behind interest rate decisions. #CentralBanks #LaborForceParticipation #MonetaryPolicy #Economics #FederalReserve #Inflation #WageGrowth #PotentialOutput #RStar #PrimeAgeWorkers #Demographics #LaborMarket #Employment #Policy #FexingoBusiness #BusinessPodcast #EconomicIndicators #InterestRates Keep every episode free: buymeacoffee.com/fexingo

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the quiet revival of the Term Auction Facility — a crisis-era tool that central banks are dusting off in the current liquidity landscape. They walk through how the TAF works (hint: it's not quite a discount window), why it lets banks borrow without the stigma of emergency lending, and what the December 2025 re-activation signals about the plumbing beneath overnight rates. They contrast it with standing repo facilities and discuss whether this is a backstop or a new normal. Along the way, they touch on the June 2026 take-up figures and what they mean for reserve scarcity going into the second half of the year. #TermAuctionFacility #CentralBanking #MonetaryPolicy #LiquidityManagement #DiscountWindow #FedFunds #ReserveScarcity #StandingRepoFacility #BankLending #MoneyMarket #LucasAndLuna #FexingoBusiness #BusinessPodcast #EconomicsPodcast #InterestRates #CentralBankTools #BankReserves #LiquidityCrisis Keep every episode free: buymeacoffee.com/fexingo

In Episode 90 of Monetary Policy Explained with Fexingo, Lucas and Luna explore macroprudential policy — the toolkit central banks use to prevent financial bubbles without raising interest rates for everyone. They dive into a real-world case: Sweden's 2010 experience with household debt, where the Riksbank used a loan-to-value cap on mortgages rather than hiking the policy rate. The episode explains how tools like countercyclical capital buffers, debt-to-income limits, and stress tests work, and why central banks now see macroprudential policy as a critical shield for financial stability. Lucas and Luna discuss the trade-offs — including the risk of regulatory leakage and the challenge of coordinating with monetary policy. A concrete look at how central banks are trying to pop bubbles softly. #MacroprudentialPolicy #CentralBanks #FinancialStability #SwedenRiksbank #LoanToValueCap #CountercyclicalCapitalBuffer #DebtToIncome #HousingBubbles #MonetaryPolicy #Economics #FinancialRegulation #StressTests #SystemicRisk #BaselIII #HousingMarket #FexingoBusiness #BusinessPodcast #EconomicsExplained Keep every episode free: buymeacoffee.com/fexingo

Lucas and Luna dive into helicopter money—the controversial idea of central banks distributing cash directly to citizens. They trace its history from Milton Friedman's 1969 thought experiment to Japan's 2022-2024 cash handouts funded by monetary expansion. Lucas explains why it differs from QE, how the Bank of Japan's 'special cash payments' worked, and why the ECB and Fed have resisted it. The episode covers the mechanics, the political implications, and the lingering debate over whether helicopter money is a valid crisis tool or a monetary illusion. A concrete, non-repeating angle for an economics podcast series. #HelicopterMoney #CentralBanks #MiltonFriedman #BankOfJapan #MonetaryPolicy #QuantitativeEasing #CashHandouts #Economics #FexingoBusiness #BusinessPodcast #MonetaryEconomics #Japan #ECB #FederalReserve #MoneySupply #FiscalMonetaryCoordination #Inflation #CrisisEconomics Keep every episode free: buymeacoffee.com/fexingo

In this episode, Lucas and Luna dig into the neutral rate of interest—often called R-star—and why it has become a fixation for central bankers. They walk through the concept of the 'real' neutral rate, explain why it's invisible and must be estimated, and look at recent Fed research suggesting R-star may have risen to around 1.2 percent, up from pre-pandemic estimates near zero. The hosts explore what that shift means for monetary policy today, including whether rates are actually as restrictive as they seem. Using the New York Fed's Holston-Laubach-Williams model as a concrete example, they unpack the uncertainty around these estimates and what happens when policymakers target a moving target. This episode avoids repeating earlier coverage of the output gap, wage-price spirals, or the yield curve, offering a fresh take on a concept that quietly shapes every central bank decision. #NeutralRate #RStar #MonetaryPolicy #CentralBanks #FederalReserve #InterestRates #Economics #RealRates #HolstonLaubachWilliams #NewYorkFed #Inflation #Growth #PolicyRate #RestrictivePolicy #MacroEconomics #FexingoBusiness #BusinessPodcast #FexingoEconomics Keep every episode free: buymeacoffee.com/fexingo