Econ Professor Says The Fed Is Working With A Fundamentally Flawed Strategy
The Federal Reserve has the power to raise interest rates, but an economist at the University of Oregon says that's not the central banks only option to jump-start our economy.
Tim Duy says the Fed is working within a policy strategy that is fundamentally flawed by focusing all its attention on interest rates and wholly ignoring the possibilities offered by balance sheet policy, Bloomberg reports. Instead of using interest rates as its only tool, Tim says the Fed should consider selling assets before raising rates further.
He says the objective of meeting the Fed’s mandate while keeping markets stable by using the interest rate tool is unattainable, and at the very least the Fed needs to consider mixing asset sales with a clear strategy of rate hikes. [Bloomberg]