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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”

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  • Charles L. Evans

    (Federal Reserve Bank of Chicago)

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.

Suggested Citation

  • Charles L. Evans, 2017. "Comments at the Panel “Responders of First or Last Resort: Central Bank Strategies in an Era of Ultra-Low Interest Rates”," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 52(1), pages 3-6, January.
  • Handle: RePEc:pal:buseco:v:52:y:2017:i:1:d:10.1057_s11369-017-0028-2
    DOI: 10.1057/s11369-017-0028-2
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    References listed on IDEAS

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    1. Congressional Budget Office, 2016. "The Budget and Economic Outlook: 2016 to 2026," Reports 51129, Congressional Budget Office.
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    8. Congressional Budget Office, 2016. "The Budget and Economic Outlook: 2016 to 2026," Reports 51129, Congressional Budget Office.
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    10. Congressional Budget Office, 2016. "The Budget and Economic Outlook: 2016 to 2026," Reports 51129, Congressional Budget Office.
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