as they aimed to meet operating targets for the money supply). This volatility is an important consideration in choosing the appropriate criterion for the identification of the turning points in rate cycles.

Next, we augment this monthly data on policy interest rates with dummy variables for major QE or QT programs. Incorporating these programs is important to capture changes in the evolution of monetary policy in several parts of the subsequent analysis, particularly when policy rates in several economies were at the lower bound and central banks relied on asset purchase programs to adjust policy. These dummy variables equal one on the announcement date of a new program (even if the program is not implemented until later) and revert to zero when the program ends.<sup>11</sup> These QE and QT dummies only include programs related to monetary policy (including balance sheet run-off through passive QT), but do not include programs primarily aimed at providing liquidity or addressing market dysfunction. The data used to compile these balance sheet variables are: CGFS (2019) and BIS (2019) for programs before the pandemic, English et al. (2021) and Fratto et al. (2021) for QE programs in response to the pandemic, and Du, Forbes, and Luzzetti (2024) and English et al. (2024) for QT programs since the pandemic.

# II.3. The Dates of the Rate Cycles

Application of our algorithm to the data on nominal policy rates and balance sheet programs yields 212 distinct rate phases (111 of tightening and 101 of easing) from January 1970 through May 2024 for our sample of 24 advanced economies. This includes the phase that each economy is in as of May 2024—even if that phase is not completed.<sup>12</sup> Appendix Table 1 lists the identified turning points at the start of tightening and easing phases. The near symmetry of the blocks for each country—with each tightening phase followed by an easing phase (and vice versa) and a roughly equal number of tightening and easing phases for each country—reflects the way in which these cycles are defined.

The 24 economies in our sample averaged 5 tightening and 4 easing phases, but some countries have had substantially more rate cycles than others. For example, the United States has had 17 distinct easing and tightening phases, and Canada and Sweden 15, while Ireland and Portugal had only 3 and 4, respectively. The smaller number of cycles for the individual euro area countries, however, reflects their shorter time series—as any cycles after 1998 are included as the euro area and not for the individual countries. Of the countries with data on nominal policy rates from 1970 through the end of the sample, Japan has the fewest turning points, with only 4 tightening and 4 easing phases—about half those of several non-euro area economies.

More interesting than this list of turning points, however, is seeing these cycles in the context of the evolution of the policy rate and any QE or QT announcements for each economy. Chart 1 shows these graphs of policy rates for three major economies: the euro area, Japan, and United States. (Appendix Charts 1 and 2 show the resulting cycles for other economies with the individual euro area countries broken out separately on one page). In each graph, the start of tightening phases is denoted by dashed purple lines and easing phases by dashed red lines. The start of QT and QE programs are in dashed blue and orange lines, respectively.

> 11 We only include programs involving government bonds (the vast majority of asset purchases programs), and do not incorporate adjustments to the speed, size or scope of the programs after announcement. 12 For an economy that has recently adjusted its policy rate, and this could become a turning point with more time, the economy is still classified as being in the phase as of May 2024. For example, even though Sweden decreased its policy interest rate on May 8, 2024, it is still classified as being in a tightening phase at end-May 2024 as its rate cut does not yet qualify as a turning point.

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