10 questions on the Fed’s "new" policy

The normalisation of US monetary policy has just about run its course. It has resulted in policy rates at a barely positive level in real terms, well below historical averages, and a balance sheet almost three times larger (as a share of GDP) than before the financial crisis. With this move, the Fed assumes that the US economy can maintain real GDP growth above its potential for at least two years, unemployment below its equilibrium level and an inflation rate that, despite every...