Kristin Forbes says the Fed made it hard for itself with its quantitative easing (QE). "Everyone expected it to end on a certain date … "
For Kristin Forbes qt could be more potent than rate rises, since it would target hot segments of the credit market, such as mortgages.
"Central banks … should not hesitate to reduce their balance sheets during recoveries — especially when inflation is high.”
If governments and central banks are too slow in removing the stimulus ... demand will continue to outpace supply.
"In Europe they chose to take the route of furloughing people, and they were still connected and had a job to come back to."
"On the supply side, it means the inflationary pressures will probably persist even longer."
… this is the wrong moment to hit the economy with any added juice. … “We certainly don't have a lot of spare workers today.”
Kristin Forbes discusses the Fed's policy outlook ahead of the U.S. jobs report.
“Central banks now appreciate that r-star has fallen, and that means they're going to have limited ability to tighten monetary policy ..."
“Climate change is important for financial stability issues...But...I worry that central banks just don't have effective tools…"
