In the 1990s, with inflation around 2-3%, and potential growth thought to be around 3-4%, nominal policy rates at 3% were seen as highly accommodative. [34] Now, with lower inflation and long-term growth expected to be 1.5-2%, nominal interest rates at that level would be seen as extremely tight and trigger a recession.
Jerome H Powell: A financial system perspective on central clearing of derivatives Speech by Mr Jerome H Powell, Member of the Board of Governors of the Federal Reserve System, at the 17th Annual International Banking Conference “The New International Financial System: Analyzing the Cumulative Impact of Regulatory Reform”, Chicago, Illinois, 6 November 2014.