Richard H Clarida: Monetary policy, price stability, and equilibrium bond yields - success and consequences

Speech by Mr Richard H Clarida, Vice Chair of the Board of Governors of the Federal Reserve System, at the High-Level Conference on Global Risk, Uncertainty, And Volatility, co-sponsored by the Bank for International Settlements, the Board of Governors of the Federal Reserve System, and the Swiss National Bank, Zurich, 12 November 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning. I am honored and delighted to participate in this second annual conference on global risk, uncertainty, and volatility, cosponsored by the Federal Reserve Board, the Bank for International Settlements, and the Swiss National Bank. I would like especially to thank the Swiss National Bank for hosting this event. This conference is part of continuing work across all of our institutions and the academic community to better quantify and assess the implications of risk and uncertainty. I am pleased that this year the focus of the conference is on two of my long-standing professional interests-financial markets and monetary policy. And my remarks today will not stray far from those interests. In particular, I would like to address an issue that has been much in focus-the decline in long-term interest rates-highlighting the role of monetary policy in contributing to that decline and the implications of that decline for the conduct of monetary policy.

The Decline in Long-Term Interest Rates and the Role of Monetary Policy

One of the most remarkable and fundamental changes in the global financial landscape over the past three decades has been the steady and significant decline in global sovereign bond yields.