JPM’s Frenkel Says Zero Interest Rate Has Exhausted Its Benefits

The video discusses the economic concept of the zero bound, where central banks have reduced interest rates to near zero, impacting financial systems. It explores recovery strategies, emphasizing the need for diverse policy instruments beyond just interest rates. The video also highlights the dangers of global fragmentation and its effects on economies. It examines market volatility, influenced by policy signals, and stresses the importance of managing expectations. Finally, it discusses the limitations of current policy tools and the central role of interest rates in economic policy.

What role do expectations play in the behavior of financial markets?

How does the toolkit of a central bank change when interest rates are close to zero?

What are the consequences of having a central bank that is too centered in the debate on economic policy?