We analyze the influence of the Taylor rule on US monetary policy by estimating the policy preferences of the Fed within a DSGE framework. The policy preferences are represented by a standard loss function, extended with a term that represents the degree of reluctance to letting the interest...

The effects of monetary policy on the risks in the financial system are discussed intensively. One hypothesis that has attracted much attention is that monetary policy does not only act through the previously known channels, but also through a hitherto neglected channel – the risk-taking...

In this article, we analyse the advantages and disadvantages of different ways of formulating inflation targets that involve an interval. We first review the international debate of ten to fifteen years ago on how an inflation target should best be designed. We then discuss the arguments in the...

Most developed countries that conduct inflation targeting have chosen a target level at or close to 2 per cent. Recently, an international debate has arisen on whether this level should be increased. In this article, we review both the arguments in the more policy-oriented debate on the level of...

One characteristic feature of central banks today is that policy decisions are almost exclusively made by a committee rather than by a single policy maker. Another is that central banks are considerably more transparent than they used to be. Together, this has brought to the fore an important...

How do monetary policy committee (MPC) members form their views about the appropriate interest rate? To what extent do they change their minds during the deliberations in the interest rate meeting? How important is the Chairman? The theoretical literature makes assumptions about these issues. We...

It has been suggested that interest-rate smoothing may be partly explained by an omitted variable that relates to conditions in financial markets. We propose an alternative interpretation that suggests that it relates to measurement errors in the output gap

The purpose of central bank minutes is to give an account of monetary policy meeting discussions to outside observers, thereby enabling them to draw informed conclusions about future policy. However, minutes are by necessity a shortened and edited representation of a broader discussion....