Sep 24

Janet Yellen Falters During Speech, Receives Medical Attention, All-Clear Given:

Yellen faltered at end of her speech. Last page was agonizing. I don’t think she felt well but she seemed better when she left the stage.”

The One Phrase That Actually Matters In Yellen’s Speech: “Nominal Interest Rates Cannot Go Much Below Zero”:

“…the federal funds rate and other nominal interest rates cannot go much below zero, since holding cash is always an alternative to investing in securities. … the lowest the FOMC can feasibly push the real federal funds rate is essentially the negative value of the inflation rate. As a result, the Federal Reserve has less room to ease monetary policy when inflation is very low. This limitation is a potentially serious problem because severe downturns such as the Great Recession may require pushing real interest rates far below zero for an extended period to restore full employment at a satisfactory pace.

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