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First, its policy interest rate is close to zero.
Japan has also kept its policy interest rate close to zero for years, to no avail.
Reflecting all this, he raised the policy interest rate by a quarter of a percentage point to 7.25%.
"Consequently, further reduction in the policy interest rate at this juncture, rather than supporting growth, could exacerbate inflationary pressures".
The policy interest rate is still zero; longer-term rates are still very low; the balance sheet is still very large.
ON OCTOBER 10th Brazil's Central Bank cut its policy interest rate for the tenth time in just over a year, to 7.25%.
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Policy interest rates cannot be reduced further.
Stabilising the economy thus is possible only by an equivalent decline in policy interest rates.
After all, given Fed policy, interest rates could be low for quite a while.
In normal times central banks loosen monetary conditions by pushing down their policy interest rates.
A rise in policy interest rates could take cash out of consumers' and producers' pockets, slowing growth to a crawl.
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