I must also mention that the Alternative Reference Rates Committee (ARRC) has done outstanding work in preparing for the move off LIBOR and, equally important, positioning us with a safe and strong foundation for the post-LIBOR world.2 And even as I acknowledge all the progress that has been achieved, it's important to remind everyone that there is still a lot to be done to move off LIBOR by the end of the year. This morning I'm going to talk about key principles that we should keep in mind as we build a successful postLIBOR world. Before I continue, let me give the usual disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System. Measure Twice, Cut Once I want to take you back to only a few years ago, when I was in junior high school. At that time, ticktock was the sound coming from the clock on the wall, and a mobile device was a transistor radio. I was a young student—not of economics, but woodworking. With tools and planks in hand, I learned the number one rule of that craft: “measure twice, cut once.” By continuing our site, agree yet to our of aUse and Privacy Statement.But Youas canwe learn more about we use cookies by Fast forward to touse today, andyou I have to Terms pursue career in carpentry. prepare for ahow post-LIBOR world, the same adage runs through my mind.
Overall, taking the APP, negative rates and rate forward guidance together, ten-year sovereign bond yields would have been almost 1.4 percentage points higher in 2018 without those measures. These yield compressions have been transmitted further to an easing of financing conditions for non-financial corporations and households. [30]  Interpreting signals from a flattening curve under central bank asset purchases The significant effect that our monetary policy had on the yield curve helped to improve financing conditions and ease the monetary policy stance. At the same time, the strong impact of our own policy makes it more difficult to read the information that the yield curve may incorporate regarding the outlook for the economy. An important and currently relevant example is the question as to what extent a flattening yield curve signals a weakening of the economic outlook. There has been a considerable body of literature devoted to this question. An important strand focuses on the negative correlation between the slope of the yield curve and the probability of future recessions, and the possible economic mechanisms underlying such a pattern. I will just briefly highlight how important it is to take our own action into account when interpreting the signals reflected in the yield curve. For the euro area, and for Germany over earlier years, we see indeed the regularity that recessions tend to have been preceded by a flattening yield curve (see Chart 2 again).