The Fed does not want to revisit another period, of more recent vintage, in which it was forced to engage in unconventional monetary policies.
, the Fed was forced to take interest rates to zero — ZIRP — launch so-called quantitative easing policies and use never-before-tried extraordinary measures to ward off complete and systemic collapses of both the global financial system and the global economy.
Over the ensuing 12 years, inflation never got above the 2% floor. Once the pandemic hit in March of 2020, the economy collapsed, the domestic unemployment rate shot up to 14%, 22 million Americans lost jobs and a deflationary death spiral seemed to be upon the global economy. That amount has now dwindled to zero in the face of worldwide rate hikes since the beginning of last year.With respect to the most recent crisis, ZIRP and massive fiscal stimulus turned the tide, most notably in the U.S. and Europe, and for the first time in over a decade pushed inflation to the highest levels in 40 years.
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