Question

Visit this url link below in the Federal Reserve website and read the entire transcript of the speech given given by the Fed’s Chair Janet Yellen on October 20, 2017 at the National Economics Club regarding the US monetary policy perspective in the context of the major challenges in the decade ahead that the Fed is facing. After highlighting her key points on nonconventional monetary policy measures, critically give her key recommendations for monetary policy to cope up with future challenges by the Fed to fine tune the economy in the face of possible crisis like the during great recession of 2008. 4pts https://www.federalreserve.gov/newsevents/speech/yellen20171020a.htm

Answer 1

The highlights of the speech included or covered two major points

1) The monetary policy tools which the Federal Reserve got to deploy in the immediate aftermath of the crisis--explicit forward rate guidance, large-scale asset purchases, and the payment of interest on excess reserves enabled them to come over the challenges of the great recession all in all.

2) The short-term interest rate techniques which come under the unconventional monetary policy tools can be helpful in coping up with the problems of the future deployment rates on the whole.

Her recommendations included the facts that the recent studies that the neutral level of the federal funds' rate appears to be much lower than it was in previous decades. With the low fund rates, there'll be less scope for the FOMC to reduce short-term interest rates as a counter to an economic downturn. On the whole,she indeed suggested that the people have been living in a significantly less severe economic downturn than the Great Recession and this can be considered as sufficient to drive short-term interest rates back to their lower bound limit all the whole.