Household consumption key for rate riddle

Households' consumption habits explain the uncovered interest rate parity puzzle, a new paper from the Bank of England reveals.

The research examines the contradiction between the uncovered interest rate parity puzzle's findings and the empirical observation that high interest-rate currencies tend to appreciate. The paper shows that precautionary savings effects, where savings rise in response to increased uncertainty, help explain this. These savings effects will only occur under the assumption

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: