Thresholds versus Triggers

Fed Chair nominee Janet Yellen believes that the Fed will keep rates at zero long after the 6.5 unemployment threshold, according to news reports.  Yellen made the comments responding to an inquiry by Massachusetts Senator Elizabeth Warren about monetary policy. The question then is what does this threshold mean and how credible is it.

Here is the key line in what Yellen wrote Warren: “Monetary policy is likely to remain highly accommodative long after one of the economic thresholds for the f...


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