Fed’s Evans: Trend growth in US is likely less than 2%

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“Hard to escape the conclusion that trend growth in the U.S. is likely less than 2%,” argued Chicago Fed President Charles Evans in a recently delivered speech.

Key quotes (via Reuters)

  • Fed needs to plan for likelihood it will hit the zero bound of interest rates more frequently in future.
  • Inflation ‘makeup’ strategies could require short-run price increases “well above” 2%, raises possible issues of whether Fed will be believed to follow through.
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