Recall that FOMC statements around the time of the taper tantrum stated that asset purchases would continue “until the outlook for the labor market has improved substantially in the context of price stability,” and it is possible that many market participants took the signal from an impending taper that the FOMC was less committed to the goal of a substantial improvement in the labor market than they had thought. Not only could this have affected some investors’ expectations for the balance sheet going forward, but it could have also affected views on the FOMC’s other policy tool: the overnight interest rate.23 A related possibility is that in the current situation expectations for a very gradual program of increases in the federal funds rate are relatively well entrenched, with liftoff more than a year and a half behind us. In 2013 market participants were focused on policies that would add more 9 / 15  BIS central bankers' speeches  accommodation. Under the “recruitment effect” proposed by former Governor Jeremy Stein and Sam Hanson of Harvard Business School, yield-oriented investors react to lower short-term rates by “reaching for yield” into longer-dated maturities, and reverse this effect when short-term rates rise. These effects can be even larger when balance sheet policies are in active use.24 As a result, a shock to expectations of the central bank’s reaction function can lead to outsized movements in longer-term rates.
In our case, about 46% of women participate in the labor force. Why activity rate of women on the labor market is low? According to a World Bank survey, about half of the inactive women reported that they do not seek employment because of family or caring responsibilities – twice the share of women stating this reason in the EU28. Another economic impact is also visible through the income channel. For example remittances, which are very important source of disposable income in the region including our country, plunged across the board last year. According to the UN study, the decrease was more prominent among women than men; especially among women in rural areas, and among women 35–44 years of age. Although wage data is still not available to see how the COVID crisis has affected this wage gap that existed even in the pre-crisis period, some indicators point out that probably the wage gap has widened throughout this period. For example, in North Macedonia assessment is that the wage gap has hovered throughout the range of 16–20%, which is already large. Apparently, the crisis has hit women and men unevenly, which is a natural consequence of the fact that it did not hit all the sectors equally. It had more pronounced effect on the services, especially services dependent on social interaction, and informal economy where women tend to be presented more. For example, in our country these sectors employ about 27% of all employed women and about 25% of all employed men.