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Does the Fed have the tools to fight the next recession?

There are good reasons to believe the next recession will be modest, which means that, even though the nominal interest rate would probably hit the near-zero lower bound again, the Fed should have the tools to counter that downturn by employing some of its unconventional options. Despite the size of the Federal budget deficit, there is also scope for Congress to give the Fed a helping hand with further fiscal stimulus.

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