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Comments at the Panel “Responders of First or Last Resort: Central Bank Strategies in an Era of Ultra-Low Interest Rates”

Comments at the Panel “Responders of First or Last Resort: Central Bank Strategies in an Era of... Abstract There is an emerging consensus among economists that the trend rate of economic growth in the U.S. is much lower now than in the past. In a lower-trend-growth regime, short-term equilibrium real interest rates are lower, all else being equal. In these circumstances monetary policymakers have less room to cut policy rates before hitting the zero lower bound and relying on unconventional policy tools to provide additional accommodation. Moreover, preserving the Fed’s credibility for providing sufficient accommodation to achieve our symmetric inflation objective and maximum employment remains an important consideration. Therefore, risk-management policies favor skewing policy today to lower the chances of facing more difficult zero-lower-bound outcomes in the future. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Business Economics Springer Journals

Comments at the Panel “Responders of First or Last Resort: Central Bank Strategies in an Era of Ultra-Low Interest Rates”

Business Economics , Volume 52 (1): 4 – Jan 1, 2017

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References (23)

Publisher
Springer Journals
Copyright
2017 National Association for Business Economics
ISSN
0007-666X
eISSN
1554-432X
DOI
10.1057/s11369-017-0028-2
Publisher site
See Article on Publisher Site

Abstract

Abstract There is an emerging consensus among economists that the trend rate of economic growth in the U.S. is much lower now than in the past. In a lower-trend-growth regime, short-term equilibrium real interest rates are lower, all else being equal. In these circumstances monetary policymakers have less room to cut policy rates before hitting the zero lower bound and relying on unconventional policy tools to provide additional accommodation. Moreover, preserving the Fed’s credibility for providing sufficient accommodation to achieve our symmetric inflation objective and maximum employment remains an important consideration. Therefore, risk-management policies favor skewing policy today to lower the chances of facing more difficult zero-lower-bound outcomes in the future.

Journal

Business EconomicsSpringer Journals

Published: Jan 1, 2017

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