4. Participants also noted that the lower long-run equilibrium rate implies that the near-zero effective lower bound could become binding more frequently. As a result, “several” participants indicated that it would be “prudent” to consider “options for providing additional monetary policy accommodation” should the economic recovery falter.
In other words - as the bolded sections highlight -
The Fed is admitting that the neutral rate (to which they will theoretically raise rates before re-easing) will remain lower for longer...
...and therefore will reach ZIRP more frequently going forward...
...which means, as they state, using "additional monetary policy accomodation."
Which means, unless The Fed wants to implement NIRP (which it appears it does not), they will have to do more QE, more frequently going forward...
...basically admitting that the rate manipulation transmission channel is defunct for all intent and purpose.
* * *
So what Goldman discovered was the 'smoking gun' admission that this is no normal recovery and what was once entirely extreme and experimental monetary policy will be the new normal... and that may be why stocks and bonds rallied and why the dollar dropped and gold and crude gained.
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