Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates

Episode 29 of Monetary Policy Explained uncovers the less visible channel through which central banks shape mortgage rates: the term premium on long-term bonds. Lucas and Luna dissect how the Fed's quantitative easing in 2020 compressed the thirty-year mortgage rate by an estimated 1.2 percentage points beyond what the federal funds rate alone would suggest, using data from the Atlanta Fed's term...

Episode 28 of Monetary Policy Explained with Fexingo examines forward guidance—central banks' strategy of communicating future policy intentions to shape market expectations. Lucas walks through the Bank of Canada's path-dependent guidance from 2009 and the Federal Reserve's 2013 threshold-based approach on unemployment. Luna brings a 2020 RBNZ yield-targeting example. They discuss how forward gui...

In Episode 27 of Monetary Policy Explained with Fexingo, Lucas and Luna break down credit easing — a lesser-known but powerful central bank tool that targets specific sectors, unlike broad quantitative easing. Using the Fed's 2020 Secondary Market Corporate Credit Facility as a case study, they explain how credit easing works, why it was controversial, and how it differs from QE. They also touch o...

Episode 26 of Monetary Policy Explained explores a rarely discussed facet of central banking: international policy coordination. Lucas and Luna examine the 2025 G20 finance ministers' joint statement on monetary spillovers, focusing on how the Federal Reserve's 2024 rate cuts created ripple effects for emerging-market central banks. They dig into the specific case of the Bank of Korea's response t...

In Episode 25 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the central bank tool that doesn't get enough airtime: reserve requirements. They start with a concrete anchor — China's central bank just cut its reserve requirement ratio by 25 basis points in May 2026 — and explore why reserve requirements have fallen out of favor in advanced economies while remaining active in em...

Lucas and Luna dive into the impossible trinity, also known as the trilemma of international finance. Using the case of the Swiss National Bank in 2015, when it abruptly abandoned its euro peg, they explain why no central bank can simultaneously have a fixed exchange rate, free capital movement, and independent monetary policy. They explore how the trilemma constrained the SNB's decision, the cons...

In this episode, Lucas and Luna explore the quiet resurgence of bond purchases by central banks in 2026. After years of quantitative tightening, several major central banks—including the Bank of Japan and the European Central Bank—have resumed net buying of government bonds. Lucas explains the mechanics: these are not crisis-level QE programs but smaller, steady purchases aimed at managing yield c...

Episode 22 of Monetary Policy Explained with Fexingo. Lucas and Luna drill into one of central banking's oldest and least-understood tools: moral suasion. Not jawboning or press conferences — the quiet, off-the-record phone calls where a central bank governor asks a bank CEO to pull back on lending or hold off on a dividend. Lucas traces the tactic back to the Bank of England's 'governor's eyebrow...

When commercial banks undergo stress tests, everyone watches. But central banks also run stress tests on themselves—examining what happens to their own balance sheets if interest rates spike, if a currency peg comes under attack, or if a major counterparty defaults. Lucas and Luna explore how the Federal Reserve, the ECB, and the Bank of Japan model these scenarios, what they've learned from recen...

When a mid-sized European bank wobbled in early 2026, the European Central Bank didn't cut rates or lend directly. Instead, it deployed a rarely used crisis tool: targeted liquidity auctions with a penalty rate. Lucas and Luna break down how central banks detect and contain financial contagion before it spreads. They walk through the mechanics of the ECB's emergency lending facility, the data sign...

Central banks publish inflation forecasts every quarter, and they are almost always wrong. But that doesn't mean they are useless. In this episode, Lucas and Luna dig into the mechanics of how central banks produce their inflation projections — the models, the assumptions, the judgment calls — and why being wrong is part of the point. Lucas walks through the Bank of England's fan chart as a concre...

In this episode of Monetary Policy Explained, Lucas and Luna explore the lender-of-last-resort function of central banks, focusing on the Federal Reserve's discount window and the 2023 banking turmoil. They examine how emergency lending tools work in practice, the stigma attached to using them, and what the creation of the Bank Term Funding Program revealed about the limits of traditional faciliti...

In this episode, Lucas and Luna explore how central banks are designing digital currencies for everyday use. They unpack the Bank of England's 2025 'digital pound' pilot, which aims to process 30,000 transactions per second while preserving privacy. Lucas explains the tiered access model with a £20,000 individual holding limit, how the system avoids disrupting commercial banks by using a 'reverse...

Episode 16 of 'Monetary Policy Explained with Fexingo' digs into the art of central-bank communication. Lucas and Luna explore how the Federal Reserve, ECB, and Bank of Japan use meeting minutes, press conferences, and speeches to shape market expectations—without saying too much. They break down the 2024 Fed minutes that caused a 20-basis-point bond yield swing, the ECB's 'forward guidance' shift...

This episode of Monetary Policy Explained examines the quiet revolution in central bank payment infrastructure. Lucas and Luna explore how the Federal Reserve's FedNow service, launched in 2023, is competing with private real-time payment networks like The Clearing House's RTP. They discuss why the ECB's TARGET Instant Payment Settlement (TIPS) processed over 300 million transactions in 2025, how...

Central banks around the world have been net buyers of gold for fifteen straight years, but the pace accelerated dramatically in 2022 and hasn't let up. In this episode, Lucas and Luna dig into the numbers: over 1,000 tonnes purchased in 2023 and 2024 combined, concentrated in central banks from China, Poland, Turkey, and India. They explore the logic behind the shift — diversification away from U...

Episode 13 of Monetary Policy Explained with Fexingo dives into the mechanics of currency pegs. Lucas and Luna examine the Hong Kong dollar's 43-year link to the US dollar — how the Hong Kong Monetary Authority maintains the peg through automatic interest rate adjustments and reserve management. They contrast this with the 1992 Black Wednesday crisis when the UK was forced out of the European Exch...

Episode 12 of Monetary Policy Explained with Fexingo dives into a rarely discussed but critical dynamic: how central banks handle political pressure. Using the 2019 incident when former President Trump attacked Fed Chair Jerome Powell on Twitter as a central case, Lucas and Luna unpack the mechanisms central banks use to preserve credibility—forward guidance transparency, independence in rate deci...

Episode 11 of Monetary Policy Explained with Fexingo digs into foreign exchange intervention — when central banks directly buy or sell their currency to influence the exchange rate. Lucas and Luna break down the mechanics using the Bank of Japan's 2022 yen-buying spree as a concrete case. They walk through how the BOJ sold U.S. Treasuries to raise dollars, then sold those dollars for yen, all to p...

Central banks in advanced economies have spent the last two decades making policy errors — and then systematically studying them. In this episode, Lucas and Luna walk through three concrete cases: the Bank of Japan's early 2000s quantitative easing that took a decade to exit, the European Central Bank's 2011 rate hikes that deepened the eurozone crisis, and the Bank of England's 2022 gilt market i...

Episode 9 of Monetary Policy Explained with Fexingo: Lucas and Luna dive into quantitative tightening — the process central banks use to shrink their balance sheets after crisis-era bond buying. They walk through the specific mechanics: how the Fed lets Treasury securities roll off without reinvesting, the difference between passive QT and active asset sales, and one real case study — the Bank of...

When central banks push policy rates below zero, it flips conventional banking logic on its head. In this episode, Lucas and Luna explore how negative interest rates actually work in practice—using the European Central Bank's experience from 2014 through the 2020s as the central case. They break down the mechanics: why a negative deposit rate means banks pay to park reserves, how it is supposed to...

Episode 7 of Monetary Policy Explained with Fexingo digs into the yield curve—not the inverted one you keep hearing about, but how central banks actually use the entire curve to steer borrowing costs and signal future policy. Lucas explains why the Fed stopped targeting just the short end after 2008 and how tools like Operation Twist and forward guidance rewrite the yield curve's shape. Luna asks...

Episode 6 of Monetary Policy Explained with Fexingo dives into inflation targeting — the framework adopted by central banks worldwide to anchor expectations and stabilize prices. Lucas and Luna explore how the Reserve Bank of New Zealand pioneered the first inflation target in 1990, setting a 0-2% band that evolved into the modern 2% target used by the Fed, ECB, and others. They discuss why explic...

In this episode of Monetary Policy Explained with Fexingo, Lucas and Luna explore why central banks coordinate their policy moves with other central banks. They focus on a specific case: the coordinated rate cuts by six major central banks in October 2008 during the global financial crisis. Lucas explains the logic behind such moves—preventing competitive devaluations, stabilizing currency markets...