This, in turn, could raise the probability of a sudden hike in risk premiums, the longer forward guidance is in place and the more aggressively quantitative easing is pursued. Monetary policymakers have to take this into account in order to avoid unintended consequences.
1  2  See Stephen Morris and Hyun Song Shin (2015), Risk Premium Shifts and Monetary Policy: A Coordination Approach, Princeton University – William S Dietrich II Economic Theory Center Research Paper No 075_2016, 2015. BIS central bankers’ speeches  But it is not only the behaviour of asset managers that is relevant to monetary policy.