Six ways the Federal Reserve could respond to the next recession

If another recession hits, does the Federal Reserve have any tools left to bring the economy back to growth and stability? Or has it run out of ammunition? Jon Faust of Johns Hopkins University argues that, with short-term interest rates still near zero, the tools the Fed has used in the past Fed’s tools may not be as powerful or effective as usual. These no-longer new methods include cutting short-term interest rates to zero, offering what Faust calls “information-only forward guidance” to tell financial markets where Fed officials expect short-term interest rates to be in the future, and engaging in ... READ MORE