Repo Rates Disconnected from Money Market, Impacting Monetary Policy Pass-through
The article "Monetary Policy Disconnect" explores how different factors affect the money market. When banks have access to the central bank's deposit facility and use assets eligible for Quantitative Easing, the money market becomes more segmented. This means that the rates for loans secured by these assets are more influenced by collateral rather than traditional funding rates. This finding has important implications for how monetary policies are implemented and how they impact the overall economy.