If expectations for prolonged zero rates grow excessively, that may stimulate demand too much, cause a swing in economic activity and force the central bank to make drastic policy changes. |
The central bank should steer its monetary policy so that expectations are not fueled too much that the low interest-rate policy will be prolonged. |
The main goals in the conduct of monetary policy after quantitative easing will be to ensure that the ensuing adjustment in the bond market remains orderly. |
We can expect volatility in the short and intermediate sectors to remain at lofty levels. |