Some observers tend to reduce monetary policy to the level of the key policy rate. The lower the policy rate, the argument goes, the more effective is monetary policy in response to a downturn. This view is too simplistic.
To compare only the levels of policy rates without consideration for the resulting market rates and other economic variables is to look at just one part of a far broader canvas. Let me give you a concrete example. At 1% at the moment, our rate on refinancing operations is higher than the US federal funds rate target range of 0-0.25%.