Monetary policy expectations shape asset prices, impacting global economies.
The article explores how asset prices are influenced by people's expectations and how monetary policy plays a role in shaping these expectations. The researchers from Taiwan studied this by analyzing data and found that changes in monetary policy can impact asset prices through the way people form their expectations. They discovered that when people expect higher future interest rates, asset prices tend to decrease, and vice versa. This suggests that monetary policy can affect asset prices by influencing what people anticipate will happen in the future.