I share these concerns about our economy. Economic conditions are far from satisfactory, unemployment is simply too high, and we want a stronger recovery. But as much as I want short-term improvement, I am mindful of possible longer-term consequences of zero interest rates and further easing actions.
Rather than improve economic outcomes, I worry that the FOMC is inadvertently adding to “uncertainty” by taking such actions. Remember, high interest rates did not cause the financial crisis or the recession. Let me summarize four key points that I judge relevant in choosing among monetary policy options.