Does the Fed believe in secular stagnation?
In an email on Friday, Deutsche Bank’s Torsten Slok asked this question, wondering if based on the Fed’s GDP outlook, the Fed isn’t start to believe the idea.
Secular stagnation has become something of a catch-all term for the general ills of the global economy, including lack of growth and the perceived need for central banks to keep their monetary policy accommodative.
Slok wrote on Friday:
For the past five years FOMC expectations for GDP growth have been repeatedly lowered and as an investor you have to ask yourself if the FOMC is beginning to believe in secular stagnation … The bottom line in the chart below is that the Fed is no longer expecting a strong rebound over the coming years. In my view, the risks are rising that the Fed is becoming too pessimistic about the outlook.
Something to keep in mind.
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