New Investment Study Findings Reported from Federal Reserve Bank of Kansas City (How Optimal Was Us Monetary Policy At the Zero Lower Bound?*): Investment

2025 MAR 28 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- A new study on Investment is now available. According to news reporting out of Kansas City, Missouri, by NewsRx editors, research stated, “In theory, the zero lower bound on nominal interest rates can generate substantial downward pressure on longer-term inflation expectations.”

Our news journalists obtained a quote from the research from the Federal Reserve Bank of Kansas City, “We use data on interest rate options and inflation compensation to estimate the degree to which the probability that the zero lower bound binds in the future has weighed on inflation expectations in the United States. Over the 2008-2019 period, we estimate that the zero lower bound imparted only a small drag on longer-term inflation expectations of around 10 basis points.”

According to the news editors, the research concluded: “We argue that the Federal Reserve’s use of forward guidance and large-scale asset purchases largely offset the potential disinflationary effects of the zero lower bound, even prior to formally adopting an average inflation targeting framework.”

This research has been peer-reviewed.

For more information on this research see: How Optimal Was Us Monetary Policy At the Zero Lower Bound?*. Journal of Financial Econometrics, 2025;23(2). Journal of Financial Econometrics can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England. (Oxford University Press - http://www.oup.com/; Journal of Financial Econometrics - jfec.oxfordjournals.org)

Our news journalists report that additional information may be obtained by contacting Brent Bundick, Federal Reserve Bank of Kansas City, Kansas City, MO 64198, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/jjfinec/nbaf001. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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