The cycle dates for the US are also a useful contrast to those for the euro area and Japan. The US has had two periods of QT. The first QT program began in 2017, 15 months after the first rate hike in December 2015, which marked the start of the corresponding tightening phase. The second QT program began around the same time as the March 2022 rate hike, which marked the start of the most recent tightening phase. This accelerated start to QT after the pandemic—either at the same time as the first rate hike or soon after—occurred in most countries, although the United States is the only country to have made meaningful progress in reducing the size of its balance sheet before the pandemic.<sup>16</sup> The more frequent turning points in the United States, and corresponding larger number of easing and tightening phases relative to Japan and the euro area, are more typical of other countries in the sample. The dates of the turning points for the US correspond to well-known shifts in monetary policy, as well as to the obvious peaks and troughs in the policy rate data. This is noteworthy given the greater volatility of policy rates earlier in the sample when the Federal Reserve and some other central banks relied on different tools and monetary frameworks (e.g., sometimes focused on the control of monetary aggregates). Despite these changes in how monetary policy is conducted, the dating algorithm, together with the additional criteria discussed above (and in Appendix 1), appears to have been successful in identifying the major turning points in policy interest rates that generally correspond to shifts in monetary policy.

While these differences in rate cycles across the euro area, Japan, and the United States are useful to understand the dating algorithm, there are also several fairly consistent patterns across most economies. Policy interest rates tended to be higher and substantially more volatile in the first half of the sample—reflecting higher neutral rates and inflation combined with monetary policy regimes that generally focused less on the level of the policy rate and more on other variables (such as the money supply). In the latter half of the sample, interest rates tend to be lower and much more stable (often flat around the lower bound in the 2010s), with a corresponding shift to more frequent use of balance sheet policy. There are also substantially fewer turning points after 2010, with several countries in a single, lengthy easing phase from 2008 through 2021/2022. As explained in Section IV, these differences in the level of policy rates and the frequency of changes in them may have contributed to the increased international synchronization of rate cycles by some measures.<sup>17</sup> When most countries shifted to a tightening phase after the pandemic, many combined sharp increases in interest rates with the start of QT.

# III. Characteristics of the Rate Cycles

This section analyzes key characteristics of rate cycles across countries. It begins by calculating descriptive statistics for tightening and easing phases and then evaluates how rate cycles relate to the evolution of key macroeconomic variables (capturing activity, the labor market, and inflation). The second half of the section evaluates how these characteristics of rate cycles have changed over time, including how the tightening episode that began after the COVID-19 pandemic and the corresponding evolution of macroeconomic variables compare to previous episodes.

> 16 The only other country to announce a formal QT program before the pandemic was Sweden (in April 2019), but there was little progress in reducing asset holdings before the onset of the pandemic. Other countries had brief periods during which their balance sheet shrank as various programs expired or rolled off, but these are generally not included as formal QT programs. See Du Forbes and Luzzetti (2024) for details and a cross-country analysis of QT and central bank balance sheets.

> 17 This aligns with Ciccarelli and Mojon (2010) and Chatterjee (2016), which argue that lower inflation is associated with greater inflation and interest rate synchronization across countries.

13