Raghuram Rajan | Central banks’ year of reckoning
With most major central banks apparently seeking to normalize monetary policy, we should ask why these extraordinary measures were used and whether they worked, says Raghuram Rajan
Since 2008, central banks in industrial countries have deviated from ordinary monetary policymaking in a variety of ways. They’ve tried to persuade the public through “forward guidance" that interest rates would stay low for extended periods of time. And they’ve deployed various programmes such as long-term refinancing operations (LTROs), the securities markets programme (SMP) and quantitative easing (QE) in pursuit of various goals.