1)Explain what the yield curve show and how it reflects current and expected future Central Bank policy rates. Using your analysis, explain how Central Banks might use Forward Guidance to reduce current long-term interest rates.

2Explain the concept of forward guidance and outline its impact on the yield curve. Compare and contrast forward guidance and quantitative easing as unconventional monetary policy tools.

3What are the different types of Central Bank Forward Guidance? Explain the impact of Forward Guidance on the Yield Curve.

Answer rating: 100% (QA)

1 The yield curve is a graphical representation of the yields on bonds of similar credit quality but different maturities It shows the relationship between bond yields and their respective maturities ... View the full answer