Abstract

The financial crisis that began in 2007 led to serious impairment of the functioning of financial markets worldwide and contributed significantly to the recession of 2008–2009 experienced by the world's major economies. Monetary policymakers responded initially in a conventional way by cutting interest rate targets and by making borrowing from existing lending facilities more attractive, but, as the crisis intensified and the recession deepened, monetary policy makers began to employ more unconventional tactics. This chapter discusses the monetary policy actions undertaken by major central banks during the crisis and some of the implications of the crisis for post-crisis monetary policy.