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Fed Signals Low Rates Likely to Last Several Years Summary: The Federal Reserve pledged to support the economic recovery by setting a higher bar to

Fed Signals Low Rates Likely to Last Several Years

Summary:The Federal Reserve pledged to support the economic recovery by setting a higher bar to raise interest rates and by signaling it expected to hold rates near zero for at least three more years. In new projections released Wednesday after a two-day policy meeting, all 17 officials who participated said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023. The Fed's rate-setting committee also revised its post-meeting statement to specify it would maintain rates near zero until it sees evidence of a tight labor market and inflation reaches 2% "and is on track to moderately exceed 2% for some time."

Questions:

1. Based on the article, what appear to be the main areas of focus of the Federal Reserve in making its decisions on interest rates (also referred to as the "dual mandate")?

2. The Fed recently abandoned their longtime strategy of pre-emptively lifting interest rates to head off higher inflation. According to the article, what does their new strategy consist of?

3. Apart from monetary policy, what appears to be the Fed's position with respect to fiscal policy?

4. What are the key components of the debate around the provision of forward guidance?

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Before end of day Saturday(earlier is better)post a Thread of your academic response to the exploration of risk and returns which has been coveredin this week's readings and videos.Convey your own perspective on the topic and write-your thread in a manner which demonstrates you have fully completed the reading and other assignments and which invites discussion by your fellow classmates.Participate in discussion on your thread if it arises.

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