Tags: Fed | memo | deflation | slump

Fed Staff Saw Prolonged Slump, Possible Deflation in 2008 Memo

Friday, 04 April 2014 02:02 PM

Federal Reserve board staff, in the days before the central bank lowered its benchmark lending rate to near zero, showed concern the U.S. economy faced a lengthy downturn with a possible decline in prices, according to documents released today.

“Confidence bands around the staff forecast and optimal control simulations suggest a sizable probability of a deep and prolonged economic slump that could result in deflation,” according to the staff memos in December 2008. “Board staff is not alone in seeing a significant risk of such a dire outcome.”

The Peterson Institute in Washington released the documents today on its website, saying they were received through a Freedom of Information Act request.

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Federal Reserve board staff, in the days before the central bank lowered its benchmark lending rate to near zero, showed concern the U.S. economy faced a lengthy downturn with a possible decline in prices, according to documents released today.
Fed,memo,deflation,slump
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2014-02-04
Friday, 04 April 2014 02:02 PM
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