Risk inclination channel

It is a well-documented empirical fact that financial market participants adjust their return expectations only very sluggishly to the development of market interest rates. As a result, they are more inclined to take risks when interest rates are low. Monetary policy must take this fact into account in its decisions and not focus solely on the interest rate channel. – See transmission mechanism. monetary, interest rate pass-through.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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