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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsA New Fed Study Destroys One Of The Central Tenets Of Monetary Policy
http://www.businessinsider.com/business-investment-sensitivity-to-interest-rates-2014-1Business investment (red line) has yet to accelerate, even though the Fed's main policy tool, the fed funds rate (blue line) has been pinned at zero since the recession.
***SNIP
In the paper, the economists examine data from the quarterly Duke University/CFO Magazine Global Business Outlook survey conducted in September 2012, which asked chief financial officers across companies of various sizes questions related to their spending plans.
The main findings:
The vast majority of CFOs indicate that their investment plans are quite insensitive to potential decreases in their borrowing costs. Only 8% of firms would increase investment if borrowing costs declined 100 basis points, and an additional 8% would respond to a decrease of 100 to 200 basis points.
Strikingly, 68% did not expect any decline in interest rates would induce more investment.
In addition, we find that firms expect to be somewhat more sensitive to an increase in interest rates. Still, only 16% of firms would reduce investment in response to a 100 basis point increase, and another 15% would respond to an increase of 100 to 200 basis points.
Read more: http://www.businessinsider.com/business-investment-sensitivity-to-interest-rates-2014-1#ixzz2qCGNTVks
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A New Fed Study Destroys One Of The Central Tenets Of Monetary Policy (Original Post)
xchrom
Jan 2014
OP
marmar
(77,047 posts)3. PM kick