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Fed Running Out of Forward Guidance as Markets Exhaust Tool

  • Drop in long-term interest rates leaves little room for shift
  • Waning ability to offset shocks tightens financial conditions
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Janet Yellen says one of the tools the Federal Reserve can use to fight the next recession is a pledge to keep interest rates low for a long time, but the economist who led the intellectual charge to deploy such forward guidance isn’t so sure.

QuickTake Forward Guidance