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Signalling with official interest rates: the case of the German discount and lombard rate

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  • Peter Anker
  • Jorn Wasmund

Abstract

A major characteristic of the operating procedure of the European Central Bank (ECB) is its reliance on standing facilities. It is intended that the official rates on those facilities also serve the function of signalling. The case of Germany, where the Bundesbank followed a similar signalling strategy, is analysed. In particular the paper investigates whether announcements of official interest rates provide information not already contained in other policy measures and whether the resulting revisions of expectations are efficient. Significant differences are found between signalling in the case of increasing and decreasing interest rates.

Suggested Citation

  • Peter Anker & Jorn Wasmund, 2005. "Signalling with official interest rates: the case of the German discount and lombard rate," The European Journal of Finance, Taylor & Francis Journals, vol. 11(1), pages 17-31.
    • Handle: RePEc:taf:eurjfi:v:11:y:2005:i:1:p:17-31
    DOI: 10.1080/13518470010011251
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    References listed on IDEAS

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