Contractionary Monetary Policy

Here are several examples of monetary tightening policies implemented by central banks around the world:

Federal Reserve (United States)

Volcker Shock (1980-1982)

• The Federal Reserve, under Chairman Volcker, significantly increased the federal funds rate from approximately 11\% in 1979 to a peak of 20\% in 1981.

• The central bank also introduced other measures to tighten monetary policy, such as increasing reserve requirements for banks.

People's Bank of China

Monetary Tightening (2017-2018)

• The People
  ’s Bank of China implemented a range of measures to tighten monetary policy.

• These included raising various market interest rates and increasing reserve requirements for banks.

Bank of England (United Kingdom)

Quantitative Tightening (QT) (2018-2019)

• The Bank of England (BOE) initiated Quantitative Tightening (QT) in 2018, leading to a reduction in its balance sheet.

• This involved reversing some of its previous asset purchases.

• The BOE also signaled the possibility of future interest rate hikes, though no increases occurred before the COVID-19 pandemic.

European Central Bank (Eurozone)

Monetary Policy Normalization (2018-2019)

• The European Central Bank (ECB) concluded its Quantitative Easing (QE) program in 2018.

• The central bank also began signaling a normalization of monetary policy, including the prospect of future interest rate adjustments.

Reserve Bank of Australia

Interest Rate Hikes (2002-2008)

• The Reserve Bank of Australia (RBA) raised its main policy rate from 4.25\% in 2002 to a peak of 7.25\% in 2008.

• This period saw several incremental rate hikes.