Episodes

  • How Central Banks Use Forward Guidance to Shape Markets

    How Central Banks Use Forward Guidance to Shape Markets
    Jun 15 2026
    In this episode of Monetary Policy Explained, Lucas and Luna dive into forward guidance — one of the most powerful yet misunderstood tools in a central banker's kit. They break down the Bank of Canada's 2020 'lower bound' guidance as a concrete example, showing how a simple sentence about holding rates until slack is absorbed moved bond markets by 20 basis points. The hosts explore the credibility problem: what happens when guidance is broken, as the Federal Reserve learned in 2021 with its 'transitory inflation' call. They contrast explicit date-based guidance with state-contingent guidance, and discuss why the European Central Bank's tiered guidance in 2022 created confusion. No vague theory — just a focused look at how words become policy. Plus, a brief note on why this show stays ad-free and how listener support makes that possible. #ForwardGuidance #CentralBanking #MonetaryPolicy #BankOfCanada #FederalReserve #EuropeanCentralBank #InterestRates #Inflation #BondMarkets #Credibility #StateContingent #DateBased #TransitoryInflation #Economics #FexingoBusiness #BusinessPodcast #PolicyTools #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo
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    6 mins
  • How Central Banks Use Moral Suasion to Guide Markets

    How Central Banks Use Moral Suasion to Guide Markets
    Jun 14 2026
    Episode 51 of Monetary Policy Explained with Fexingo dives into moral suasion—the soft power central banks use to influence markets without changing rates or reserves. Lucas and Luna unpack how the Bank of Japan's 2022 yield defense relied on jawboning, why the Federal Reserve's 2023 whispers about bank capital ratios moved credit desks, and where this tool works best (and fails hardest). Specific examples include the BOJ's verbal interventions to defend the 0.25% yield cap and the ECB's 2022 guidance on rate hikes that front-ran actual policy moves. The hosts also explore the limits: when markets stop listening, as seen during the 1992 ERM crisis. If you've ever wondered why a central banker's offhand comment can swing bond yields, this episode explains the mechanics. #MonetaryPolicy #CentralBanks #MoralSuasion #BankOfJapan #FederalReserve #ECB #YieldCurve #Jawboning #BondMarkets #ForwardGuidance #SoftPower #Economics #FexingoBusiness #BusinessPodcast #LucasAndLuna #MonetaryPolicyExplained #2026 #InterestRates Keep every episode free: buymeacoffee.com/fexingo
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    10 mins
  • Why Central Banks Are Raising Their Inflation Targets

    Why Central Banks Are Raising Their Inflation Targets
    Jun 14 2026
    Episode 50 of Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates. Today, Lucas and Luna dig into a quietly seismic shift in central banking: the move to raise long-term inflation targets. The Bank of Canada recently completed a five-year framework review and set a new 2.5 percent target, up from 2.0 percent. The Federal Reserve has internally debated a similar move in its 2025 review. Lucas explains the logic—giving central banks more room to cut rates during downturns, reducing the risk of hitting the zero lower bound—and the risks: unanchored expectations, political blowback, and the credibility loss from moving the goalposts. Luna asks whether 3.0 percent might be optimal, and they discuss the findings of Olivier Blanchard's 2023 paper on optimal inflation. The episode also touches on why the ECB and Bank of Japan are watching these debates closely. Specific, grounded, and timely for June 2026. #MonetaryPolicy #CentralBanks #InflationTargeting #BankOfCanada #FederalReserve #OlivierBlanchard #ZeroLowerBound #InterestRates #Economics #Business #Finance #Inflation #MonetaryPolicyReview #CentralBankIndependence #PolicyCredibility #ECB #BankOfJapan #FexingoBusiness Keep every episode free: buymeacoffee.com/fexingo
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    11 mins
  • How Central Banks Use Tiered Reserve Remuneration

    How Central Banks Use Tiered Reserve Remuneration
    Jun 13 2026
    In Episode 49 of Monetary Policy Explained with Fexingo, Lucas and Luna dig into tiered reserve remuneration—a tool central banks use to encourage lending without cutting the policy rate below zero. They walk through the European Central Bank's 2019 tiering system, which exempted a portion of banks' excess reserves from negative rates, saving the banking sector roughly €4 billion per year. Lucas explains the mechanics: how central banks set a threshold, apply a higher rate to the first chunk of reserves, and a lower (or negative) rate to the rest. Luna asks whether tiering actually boosts lending or just provides a hidden subsidy. The hosts compare it to the Bank of Japan's 2016 three-tier system and preview how the U.S. might use tiering if negative rates ever come up. No fluff—just one concrete policy tool, explained with numbers and real-world examples. If this episode helps you understand central banking better, the show stays ad-free thanks to listener support at buy me a coffee dot com slash fexingo. #TieredReserveRemuneration #CentralBanking #ECB #BankOfJapan #NegativeRates #MonetaryPolicy #ExcessReserves #BankingSector #InterestRates #LendingChannel #Eurozone #Economics #MonetaryPolicyExplained #FexingoBusiness #BusinessPodcast #Podcast #CentralBankTools #ReserveRequirements Keep every episode free: buymeacoffee.com/fexingo
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    9 mins
  • How Central Banks Use Credit Easing to Target Specific Markets

    How Central Banks Use Credit Easing to Target Specific Markets
    Jun 13 2026
    In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna explore credit easing—a targeted form of quantitative easing where central banks buy specific private-sector assets to unstick particular credit markets. Using the Federal Reserve's 2020 Corporate Credit Facilities as the central case, they explain how the Fed bought individual corporate bonds and bond ETFs to reopen the primary market for investment-grade and high-yield issuers. Lucas breaks down the mechanics: the Secondary Market Corporate Credit Facility bought ETFs to backstop prices, while the Primary Market Facility lent directly to companies. They discuss why this differs from QE (which focuses on government bonds and broad liquidity), how the Fed chose which bonds to buy without picking winners, and why credit easing remains controversial. Luna asks whether this blurs the line between monetary and fiscal policy, and they weigh the risks of moral hazard versus the benefits of preventing a credit freeze. The episode also includes a brief, organic donation segment where Lucas notes that listener support via Buy Me a Coffee funds the show's ad-free production. #CreditEasing #MonetaryPolicy #CentralBanking #FederalReserve #QuantitativeEasing #CorporateBonds #BondETFs #SMCCF #PMCCF #LiquidityCrisis #Economics #FexingoBusiness #BusinessPodcast #Podcast #Finance #InvestmentGrade #HighYield #MoralHazard Keep every episode free: buymeacoffee.com/fexingo
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    8 mins
  • How Central Banks Use Reserve Requirements as a Policy Tool

    How Central Banks Use Reserve Requirements as a Policy Tool
    Jun 12 2026
    In Episode 47 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the often-overlooked tool of reserve requirements. Once a cornerstone of central banking, reserve requirements have fallen out of favor in many advanced economies — but not everywhere. Lucas explains how the Fed, ECB, and People's Bank of China have diverged on this tool, and why a 0% requirement doesn't mean zero policy impact. They explore the mechanics of required reserve ratios, the multiplier effect, and how China has used reserve requirement ratio (RRR) cuts to inject liquidity — including a recent 50-basis-point cut in early 2026. Luna questions whether reserve requirements still matter when banks can hold excess reserves. The episode includes a practical example: if the required reserve ratio is 10%, a $100 million deposit creates $1 billion in money supply. But in a world of abundant reserves, that textbook multiplier doesn't hold. The hosts also touch on the unintended consequences of high reserve requirements, like disintermediation and shadow banking. A thoughtful episode for anyone who wants to understand a classic tool that still shapes global monetary conditions. #ReserveRequirements #CentralBanks #MonetaryPolicy #FractionalReserveBanking #MoneyMultiplier #FederalReserve #ECB #PeoplesBankOfChina #LiquidityManagement #BankingRegulation #Macroeconomics #Economics #FexingoBusiness #BusinessPodcast #InterestRates #MoneySupply #LucasAndLuna #PolicyTools Keep every episode free: buymeacoffee.com/fexingo
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    11 mins
  • How Central Banks Use Average Inflation Targeting

    How Central Banks Use Average Inflation Targeting
    Jun 12 2026
    Episode 46 of Monetary Policy Explained with Fexingo dives into average inflation targeting — the framework adopted by the Federal Reserve in 2020 and still debated globally. Lucas and Luna break down how it differs from traditional inflation targeting, using the Fed's 2020 framework review as a case study. They explore why the Fed wanted to allow inflation to run moderately above 2 percent for a time after periods of undershooting, and how this policy played out during the post-pandemic recovery through 2025. The hosts discuss the challenges of measuring the 'average' period, communication pitfalls, and what global central banks like the Bank of Japan and the European Central Bank can learn from the US experience. No jargon, no fluff — just a clear explanation of a key monetary policy innovation. #AverageInflationTargeting #FederalReserve #MonetaryPolicy #Inflation #CentralBanking #Economics #FedFramework #2PercentTarget #JeromePowell #AIT #BOJ #ECB #PostPandemic #Macroprudential #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo
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    10 mins
  • How Central Banks Use Inflation Targeting Bands

    How Central Banks Use Inflation Targeting Bands
    Jun 11 2026
    Most people think central banks target a single inflation number like 2 percent. In practice, many of the world's most influential central banks—including the Federal Reserve, the European Central Bank, and the Bank of Japan—operate with an explicit or implicit inflation targeting band. This episode of Monetary Policy Explained with Fexingo dives into why bands matter more than a single point. Lucas and Luna walk through the Bank of Canada's symmetric 1-to-3-percent band and how it gives policymakers room to avoid overreacting to temporary shocks. They contrast this with the Bank of Japan's struggle to stay within its 0-to-2-percent band after decades of deflation. Along the way, they discuss the credibility risk when a band becomes a ceiling, and what the Reserve Bank of Australia learned from its 2-to-3-percent target. By the end, you will understand why the band is often the real policy guide, not the headline number. #InflationTargeting #CentralBanking #MonetaryPolicy #Economics #BankOfCanada #BankOfJapan #ReserveBankOfAustralia #FederalReserve #ECB #PolicyBands #PriceStability #Deflation #InflationShocks #ForwardGuidance #Credibility #MacroeconomicPolicy #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo
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    9 mins