Policy-makers must re-examine financial stability tools – Fed official
Capital regulations may not reflect increased risks from low-rate environment, Rosengren says
Policy-makers must re-examine their financial stability tools because they are inadequately factoring in the challenges associated with the low rate environment, Federal Reserve Bank of Boston president Eric Rosengren has said.
The low-rate environment makes exiting recessions more problematic not only because of a lack of policy space, Rosengren said, but also because it amplifies the severity of the downturn by encouraging greater household and corporate leverage.
“At least to date, it is my
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