What is yield curve control?

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In normal times, the Fed steers the economy by raising or lowering very short-term interest rates, such as the rate that banks earn on their overnight deposits. Under yield curve control (YCC), the Fed would target some longer-term rate and stand ready to buy long-term bonds to keep the rate from rising above its target.

This would be one way for the Fed to stimulate the economy if bringing short-term rates to zero isn’t enough.

Current Fed Governors Richard Clarida and Lael Brainard have both said the Fed ought to consider adopting YCC, as have former Fed chairs Ben Bernanke and Janet Yellen.

Source: What is yield curve control?

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