Central Banks & Monetary Policy in Depth
Learn how the Federal Reserve, the ECB and other central banks set and communicate policy, how their decisions travel through money markets and balance sheets, and how to read official documents and market-implied rate paths like a professional.
Self-study course Self-study course: written lessons, videos and downloadable materials for independent learning. There is no supervision, assessment, individual feedback or tutoring. Self-check quizzes are evaluated automatically in your browser — we do not see your results.
All 12 lessons free
Before you start
- Basic knowledge of interest rates, inflation and bond yields
- Comfort with percentages and basis points
- The macro course lesson on ECB and Fed basics, or equivalent
What you will be able to do
- Explain the difference between a dual mandate, a symmetric 2% target and average inflation targeting
- Describe how a policy rate reaches overnight and money-market rates in a corridor and in a floor system
- Calculate the balance-sheet effect of asset purchases, run-off caps and large liquidity flows
- Redline a central bank statement against the previous one and classify each change as hawkish or dovish
- Read a dot plot and compare it in basis points with the path priced by fed funds futures
- Prepare for a central bank meeting with a written checklist and review the outcome afterwards
Lessons in this course
Mandates and Frameworks: Price Stability, the Dual Mandate and Why 2 Percent
Compare how the ECB, the Fed and the Bank of England define price stability, understand inflation targeting and average inflation targeting, and apply a simple policy rule with numbers.
The Policy Toolkit: Corridor and Floor Systems, Standing Facilities and Reserve Requirements
Understand how a corridor and a floor system steer overnight rates, what the standing facilities and reserve requirements do, and calculate how a policy move reaches money-market and loan rates.
Quantitative Easing and Tightening: Balance-Sheet Mechanics, the Portfolio-Balance Channel and Run-Off
Trace an asset purchase through the central bank's and the banking system's balance sheets, understand the channels through which QE works, and calculate the pace of QT with reinvestment caps.
Reading a Central Bank Balance Sheet: Reserves, TLTROs, Repo and the Plumbing Behind Rates
Read the Eurosystem and Fed weekly balance sheets line by line, derive bank reserves from the balance-sheet identity, and work out how TLTRO repayments, treasury balances and reverse repo move liquidity.
Forward Guidance and Communication: Statements, Press Conferences, Minutes and How to Redline
Classify forward guidance by type, know the communication calendar of the Fed and the ECB, and redline a policy statement against the previous one to find the changes that matter.
The Federal Reserve: FOMC Process, the Summary of Economic Projections and the Dot Plot versus Futures
Understand who votes at the FOMC and when, read the Summary of Economic Projections and the dot plot correctly, and compare the median dot with the path implied by fed funds futures in basis points.
The ECB: Governing Council, Fragmentation Risk, the TPI and Country Spreads
Understand how the ECB Governing Council decides, why one policy rate can transmit unevenly across 21 countries, what the Transmission Protection Instrument does, and how to size a spread move in euros.
Bank of Japan, SNB and Bank of England: Yield Curve Control, Negative Rates and Policy-Divergence Trades
Learn how yield curve control and negative rates actually worked, how the Bank of England's committee differs, and how to calculate the break-even of a policy-divergence currency trade.
Transmission to Markets: Real Rates, Term Premium, Equity Multiples, Credit Spreads, Currencies and the 12–18-Month Lag
Follow a policy move through real yields, the term premium, equity valuation, credit spreads and exchange rates, and calculate how much a one-point rise in real yields can take off a price-to-earnings ratio.
Market-Implied Rate Paths: Reading OIS Curves, €STR and SOFR Futures, and What 'Pricing in 50 Basis Points of Cuts' Means
Turn overnight index swap rates and short-term interest-rate futures prices into expected policy rates, meeting probabilities and cumulative cuts, and know what these numbers do not tell you.
Independence, Fiscal Dominance and Financial Stability: Macroprudential Tools, Lender of Last Resort and the 2023 Banking Stress
Measure when government debt starts to constrain monetary policy, know the main macroprudential buffers used in Germany, and understand how the 2023 bank failures were contained and what they taught investors.
A Central-Bank Meeting Preparation Checklist and a Post-Meeting Review Template
Build a repeatable seven-day preparation routine with a scenario grid and position rules, then score every meeting with a written review that measures the surprise in basis points and your own behaviour.
Emerging & Global Markets Investing
To apply what you learned about rates, currencies and capital flows outside the US and the euro area, continue with the course "Emerging & Global Markets Investing".
View course outline