Big monetary policy changes needed to fight ‘lowflation’

Policy options: Bernanke says there are promising policy options that may be able to mitigate the effects of the zero lower bound on interest rates without forcing the public to accept a permanently higher rate of inflation. – AP

THE Federal Reserve may take radical new tactics to fight off the persistent threat of deflation but people and institutions being what they are their playbook the next time will rely heavily on measures used from 2008 to 2015.

That is excellent reason to expect the Fed to be in a hurry to begin to run down their balance sheet and get some interest rate sea room between them and the zero lower bound.