Discontinuity around the Zero Lower Bound If the research is correct in concluding that the channels for spillovers do not differ, these episodes should have played out little differently for conventional policy changes than they did for unconventional policy. That raises the question of why announcements of new policy actions around the zero lower bound have elicited such intense reactions.
Changes in the Bank Rate affect the whole range of interest rates set by commercial banks, building societies and other institutions. Thus, the level of the Bank Rate denotes the stance of monetary policy. To keep the aggregate supply of reserves at the desired level, the BoE undertakes OMO of varying maturities.