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2003, No. 18
Posted 2003-08-01

Alternative Policy Weapons?


With short-term interest rates at historic lows and increased concern about deflation (not disinflation, but deflation), many analysts have expressed concern that the Fed will not be able to conduct monetary policy if the federal funds rate—which the Fed currently targets in the conduct of policy—falls to zero. This essay discusses monetary policy "weapons" in the Fed's arsenal.