Must the Federal Reserve crimp the recovery to normalize interest rates? – AEI – American Enterprise Institute: Freedom, Opportunity, Enterprise3rd October 2018
Tight labor markets, low real interest rates, and large federal budget deficits are a textbook recipe for inflation, and yet, inflationary expectations remain contained. Is there a monetary policy that will simultaneously engender robust economic growth and “normalize” interest rates? Can the Fed push interest rates to levels that, when the next recession hits, allow the Fed to stimulate growth by lowering rates, or will the required rate hikes stifle growth? Are the odds of success improved by the Fed’s postcrisis policy of paying interest on bank reserves (IOR)? Or should the Fed phase out IOR, abandon rate normalization, and use negative interest rates in the next recession? Join AEI and a panel of experts to discuss these important issues.
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