The U.S. Federal Reserve still has enough clout to fight a future downturn, but ...
SAN DIEGO - The U.S. Federal Reserve still has enough clout to fight a future downturn, but policymakers should state in advance the mix of policies and policy promises they plan to use to get the most bang for their buck, former Fed chief Ben Bernanke said on Saturday.
Citing new research of his own and others at the Fed and elsewhere, Bernanke said the bondbuying programs known as “quantitative easing” were effective in lowering long-term interest rates even after the Fed’s target policy rate had been cut to zero. Several rounds of QE were rolled out in response to the deep 2007-2009 financial crisis and recession, and Bernanke said bondbuying should be made a permanent part of the U.S. central bank’s toolkit.
“The room available for conventional rate cuts is much smaller than in the past,” Bernanke said, but “the new policy tools are effective.”The current low level of interest rates has led many to conclude that central banks will be hobbled when a downturn occurs. The Fed’s current policy rate, for example, is in a range of between 1.50% and 1.75%, compared to more typical levels of around 3.50% in the past.
Bernanke’s conclusions about the effectiveness of QE are not new - nor are they universally accepted, with some arguing the purchases of Treasury bonds and mortgage-backed securities did little to boost the real economy, particularly beyond the initial round of buying in the immediate aftermath of the crisis.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
The Fed Has Quietly Started QE4I am a financial writer, publisher, and New York Times bestselling-author. Each week, nearly a million readers around the world receive my Thoughts From the Frontline free investment newsletter. \n\nMy most recent book is Code Red: How to Protect Your Savings from the Coming Crisis. I appear regularly on CNBC and Bloomberg TV. I’m also Chairman of Mauldin Economics, a research group that provides monthly analysis and recommendations to thousands of readers around the world.\n\nI was previously CEO of the American Bureau of Economic Research. Today I am President of the investment advisory firm Millennium Wave Advisors, LLC. I am also president and registered principal of Millennium Wave Securities, LLC a FINRA and SIPC registered broker dealer.\n\nWhen I’m not traveling to speak at conferences and events, I live in Dallas, TX. I’m also the proud father of seven children.
Read more »
What to watch today: Stock futures plunge, Strike kills Iranian commander, Fed minutes releasedWall Street is set to give back a good chunk of Thursday's strong rally, with U.S. stock futures plunging after a U.S. military strike killed a top Iranian general.
Read more »
Fed Minutes to Shed Light on Interest Rate ConsensusThe Federal Reserve releases the minutes of its Dec. 10-11 meeting Friday, shedding light on the degree to which central bank officials are rethinking their approach to raising or lowering interest rates.
Read more »
Some Fed members worried that keeping rates low would encourage too much risk-taking, minutes showThe Fed just released the minutes from its December meeting, where the FOMC voted to leave interest rates unchanged.
Read more »
Fed still worried U.S. inflation will remain too low in light of weak global economyPolicy makers at the Federal Reserve were more optimistic about the U.S. economy in December as trade tensions with China eased, but they still had lingering worries and fretted that inflation would remain too low, according to minutes of the central bank’s last meeting.
Read more »
Fed officials see no interest rate cuts in the next three years, minutes showFederal Reserve officials say their monetary policy is likely to stay appropriate “for a time” despite what they see as persistent downside risks.
Read more »