Fed’s Limbo Rock: Powell Rejects Negative Rates As A Policy Tool As Taylor Rule Suggests A Negative Target Rate Of -13.52%

Fed Chair Powell rejects using negative rates as a policy tool.

Speaking of Powell’s proclamation that negative rates are not appropriate for the US, the Rudebusch (SF Fed) specification of the Taylor Rule says that the Fed Funds target rate should be -13.52%.

That represents a spread of 13.77% over the current Fed Funds Target rate of 0.25%, the largest disconnect since 2000.

Apparently, Powell has gone as low as he will go.

Economists at the University of Chicago estimate that more than two-thirds of the workers on unemployment insurance are making more in jobless benefits than they did at work.  Some are even hauling in two to three times as much.

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