Duration extraction is thus the catalyst for the portfolio rebalancing channel, which is the main mechanism by which easing through quantitative interventions is then transmitted further through the economy. Now, what matters in particular for term premia is the entire stock of duration which the central bank removes from the hands of price-sensitive investors by taking this stock of duration on its balance sheet.
Furthermore, even after the normalization of interest rates, the nominal rate might fall back to zero or to a very low level. In that case, would unconventional monetary policy continue to be important even “beyond the exit”? Moreover, would it eventually be regarded as conventional in an economy under the “new normal”?