Central banks: Running out of ammunition in the next downturn

Quick post here. Earlier today, I sent out a note about the Bank of England's rate hike basically saying a large part of it was about the urge to normalize. When I wrote that I hadn't seen Gavyn Davies' most recent missive on central banks. And I wanted to point it out here because his message dovetails with mine.
Running out of ammo
The link to the full post is here. But let me quote the key bits I want you to take away:
For a recent Brookings Paper, Fed authors Michael Kiley and John Roberts conducted simulations on the main macroeconomic models used by the Fed to demonstrate the likely effects of a permanent decline in r* to only 1 per cent, roughly half its pre-2008 level. They conclude that the Fed’s policy rate “should” be below the effective lower bound (ELB) about 30-40 per cent of...


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