How Many Rate Hikes Does Quantitative Tightening Equal?

Bin Wei

Policy Hub, 2022, vol. 2022, issue 11

Abstract: In this article, I examine the question of how to quantify the equivalence between interest rate hikes and quantitative tightening (QT). Using a simple "preferred habit" model I estimate that a $2.2 trillion passive roll-off of nominal Treasury securities from the Federal Reserve's balance sheet over three years is equivalent to an increase of 29 basis points in the current federal funds rate at normal times, but 74 basis points during turbulent periods.

Keywords: monetary policy; quantitative tightening; QT; quantitative easing; QE; rate hikes; preferred-habitat (search for similar items in EconPapers)
JEL-codes: E43 E44 E52 E58 G12 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.atlantafed.org/-/media/documents/resea ... tightening-equal.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:96689

DOI: 10.29338/ph2022-11

Access Statistics for this article

More articles in Policy Hub from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Robert Sarwark ().