Federal Reserve

The Fed Is Planning for Another Slow Recovery

It will accept too little inflation and too much unemployment for too many years after the next recession.

Nice peaks and troughs.

Photographer: David Paul Morris/Bloomberg

Last month, U.S. Federal Reserve Chair Janet Yellen gave an important address at the Jackson Hole public-policy conference. She argued in part that, thanks to its new tools of forward guidance and long-term asset purchases, the Fed would be able to offset the next recession, even if interest rates eventually stabilized at historically low levels. (Her assessment was criticized by others, perhaps most notably by Larry Summers, as unduly optimistic.)

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