SYDNEY—With the Fed considering a new monetary policy tool to help hold interest rates low amid the severe downturn, clues to the tactic’s effectiveness can be found in one advanced economy far away. The Fed is eyeing Australia’s experience with so-called yield caps, in which a central bank buys enough government securities to prevent their yields from rising above a certain level or to pin yields at specific levels. This helps to hold down private-sector interest rates, which are influenced by government debt yields.

Source: Wall Street Journal June 28, 2020 13:52 UTC