Policymakers gathering in Jackson Hole last week highlighted that a fall in equilibrium real interest rates means that central banks may have little room to cut rates in the event of another recession. Unconventional policies such as QE and forward guidance may partly fill the gap, but they are not as powerful as interest rate cuts and probably have more undesirable side-effects. Meanwhile, the immediate outlook is for more policy easing in many advanced economies, but for another rate hike in the US, probably in December.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services