Navigating Monetary Policy Tools and Challenges for Central Banks

This chapter explores the comparison between tools used by central banks for easing and tightening monetary policy, with a focus on interest rates during policy tightening. It reflects on the confidence in utilizing interest rates versus the uncertainties surrounding measures like quantitative tightening. The discussion emphasizes the importance of flexibility in using tools like forward guidance and asset purchases, highlighting the balancing act between commitment and adaptability in influencing economic policies.