Episode Summary What happens when the central bank cuts interest rates to fight a downturn, but conventional rates hit the floor and the economy still needs help? In this episode, John and Jane explore the world of unconventional monetary policy. They break down the constraints of the "effective lower bound," explain how quantitative easing (QE) and forward guidance reach down the yield curve to move long-term rates, and analyze the Bank of Canada's first-ever large-scale QE program in 2020. Finally, they tackle the highly contested debates surrounding whether these tools actually worked, who they benefited, and the hidden risks left in their wake.

Key Concepts

• The Effective Lower Bound (ELB): Interest rates cannot fall infinitely below zero because depositors would eventually ch ...