Gravity and the Weight of the Fed’s Zero Lower Bound on Interest Rates

The Federal Reserve implemented its first rate hike last December. At that time, the Fed anticipated another four hikes in 2016 as part of the process of normalization. By the time of their March meeting, the median Federal Open Market Committee (FOMC) participant expected only two hikes this year. And market participants now expect only one hike.1 With the general outlook for a very gradual increase in interest rates in the United States, the US economy will be flirting with the zero lower boun

Source: Peterson Institute (PIIE)