Yield curve control
| Public finance |
|---|
 |
Yield Curve Control (YCC) is a monetary policy action whereby a central bank purchases variable amounts of government bonds or other financial assets in order to target interest rates at a certain level.[1] It generally means buying bonds at a slower rate than would occur under a Quantitative Easing policy. It effects long term interest rates, where as QE is more impactful on shorter term interest rates.[2] It can be thought of as a more effective form of QE: In QE the central bank buys bonds, but does not have a target for what interest rate those purchases will bring. In YCC, the central bank intentionally buys enough bonds to reach a certain interest rate target.
Two examples of Yield Curve Control can be found in the United States after World War II[3], where bonds were purchased to fund the war effort, and in Japan, early 21st century[4], where bonds were purchased to keep long term interest rates at 0%, in an effort to stimulate the economy.[5]