Working Paper
Sterilized Intervention, Nonsterilized Intervention, and Monetary Policy
Sterilized intervention is generally ineffective. Countries that conduct monetary policy using an overnight, interbank rate as an intermediate target automatically sterilize their interventions. Nonsterilized interventions can influence nominal exchange rates, but they conflict with price stability unless the underlying shocks prompting them are domestic in origin and monetary in nature. Nonsterilized interventions, however, are unnecessary since standard open-market operations can achieve the same result.
Suggested Citation
Craig, Ben R., and Owen F. Humpage. 2001. “Sterilized Intervention, Nonsterilized Intervention, and Monetary Policy.” Federal Reserve Bank of Cleveland, Working Paper No. 01-10. https://doi.org/10.26509/frbc-wp-200110
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