Federal Reserve Bank of Boston | bostonfed.org |
Bank Administration, 7 January 2020
What do we do about the low rate problem?
▶ Raise average inflation?
▶ Not on the table this time
▶ Promise higher inflation in the future?
▶ Might help
▶ Use tools more aggressively
▶ Lower short-term interest rates aggressively in the face of weakness
▶ Use "QE" (purchase of long-term Treasury bonds) more aggressively to lower
long-term rates
▶ Cap long-term rates?
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