Monday, January 24th, 2022

Experts calls on Fed for adopting new radical approach for next recession

The former chairman of Federal Reserve along with the two experts of monetary policy have said that they want the central banks to consider the new approaches which are radical for the fighting of recession when it takes place next time out of their concerns that the tools which are existing may not be anywhere as effective as they had been at the time of the previous crisis.

In a panel on the morning of Sunday at the annual meeting of American Economic Association, Lawrence Summers who is the Treasury Secretary has said that the QE program of the Fed, in which the Fed would be buying the bonds for bringing the rates of long-term might not be packing as much of a punch at the 10-year Treasury note which is already approaching 1%.

Summers has said that there was less optimism about the incremental efficacy of the QE. He said that he does not think that the 10-year rates down form the 100 bp till 50 or 20 bp has an incremental effect which is significant.

In the speech for the AEA on the night of Saturday, Ben Bernanke who is the former chairman of the Fed had said that he had thought that the Fed had to the tools which included QE for the successful combat of a major downturn.

Bernanke said that he had thought QE and the Fed’s verbal guidance are going to be an easing of 300 basis points of the benchmark of the federal funds rate benchmark of the central bank.

A former policymaker of the Bank of England, Adam Posen who has been urging the Fed for the considering of new and radical approaches including the tool known as the yield-curve control for the fighting of the next recession.

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