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Sterilized intervention, nonsterilized intervention, and monetary policy

Ben Craig () and Owen Humpage

No 110, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: Sterilized intervention is generally ineffective. Countries that conduct monetary policy using an overnight, interbank rate as an intermediate target automatically sterilize their interventions. Nonsterilized interventions can influence nominal exchange rates, but they conflict with price stability unless the underlying shocks prompting them are domestic in origin and monetary in nature. Nonsterilized interventions, however, are unnecessary since standard open-market operations can achieve the same result.

Keywords: Foreign exchange; Monetary policy; Foreign exchange rates (search for similar items in EconPapers)
Date: 2001, Revised 2001
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac and nep-mon
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