Economics
Fed Superstars Lay Out a Map for the Central Bank’s Big Rethink
- Central bank will spend 2019 thinking about policy strategies
- Bernanke, Williams, Clarida, Kiley have worked on solutions
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Federal Reserve officials will face the next recession with limited ammunition. Their ongoing search for backup firepower could shape the future of American central banking.
After years of careful hiking, officials have raised the fed funds rate to a 2.25 percent to 2.5 percent range. Even if policy makers manage to lift it a few more times before the next recession, they’ll have less room to cut borrowing costs to stimulate growth and stabilize inflation than in the past. This reality is probably the new normal, studies suggest, thanks to demographics and other long-running trends.