<p>Our study investigates the impact of the key monetary policy instruments—quantitative easing and forward guidance—on corporate default and associated welfare costs. To this end, we employ a competitive equilibrium framework that features cash-in-advance constraints and endogenous corporate default. At the medium level of default and monetary policies, the welfare cost of corporate default is estimated to exceed $9 billion, based on 2019Q4. While both monetary policies reduce default risk, their welfare implications differ: quantitative easing increases the welfare costs of corporate defaults, whereas forward guidance alleviates them. These contrasting effects highlight the importance of adopting a balanced approach to monetary policy design, which is critical for central banks and economic policymakers. By incorporating endogenous default into the competitive equilibrium framework, the model enhances sensitivity and responsiveness to monetary policy fluctuations, underscoring the role of default risk as a pivotal connector between the real economic landscape and the financial sector.</p>