This provides the basis for our view that monetary policy should be returned to a more neutral setting. I think there is widespread agreement with this assessment of the situation, but inevitably there will be people who do not agree. One doubt you sometimes see expressed is the fear that any rise in interest rates will “choke off the expansion”.
Not surprisingly, we feel that this fear is misplaced. At one level, it amounts to saying that the expansion is so fragile that it can only be continued if monetary policy is kept permanently at an expansionary setting. We also care about continuing the expansion, but feel that the least risky way of doing so is with a more neutral interest rate setting.