Exploring Economic Conditions and the Implications for Monetary Policy

Abstract: I would note that after two recent rate easings of 25 basis points each, monetary policy is already accommodative. Sustaining growth at potential depends on the U.S. consumer continuing to offset the weakness we are seeing in exports and business fixed investment. To me, it seems appropriate to continue to closely monitor incoming data to determine if the forecast of growth around potential is likely to be achieved, or if the risks I have outlined are indeed materializing. While the risks to the global and U.S. economies remain, there are also risks to easing too aggressively, as I’ve highlighted in previous speeches. Ever-lower interest rates could encourage reaching-for-yield behavior at exactly the wrong stage of the economic cycle. This remains an important consideration factoring into my views on the elements policymakers must weigh and balance at this complex time for our economy.

Keywords: monetary policy; economic conditions; global economy; employment report; risks to the economic outlook; interest rates; financial indicators; reaching for yield;

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Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Speech

Publication Date: 2019-10-11