Risks facing central banks: action and inaction

Unlike Fed policy in the 1990s, central bank actions this century do not appear overly accommodative, writes Andrew Smithers

The aims of economic policy are broadly agreed, with success defined as brisk growth combined with low and stable levels of unemployment and inflation.

As explained in my article, Escaping the structural liquidity trap (Central Banking journal, Vol 34, Issue 3), we live in a multi-equilibria economy – so that successful management of the economy cannot be assured simply by keeping demand properly balanced with available supply. We also need to avoid excessive levels of money supply and asset

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