Wonkbook: The Federal Reserve confronts a possibility it never expected

By Ylan Q. Mui Two years ago, top officials at the Federal Reserve mapped out a strategy for withdrawing the central bank's unprecedented support for the American economy. The official communiqué was titled "Policy Normalization Principles and Plans," and it was supposed to serve as a rough outline for the tenure of newly installed Fed …   The latest economic and domestic policy from Wonkblog   The Federal Reserve building in Washington (Kevin Lamarque/Reuters) By Ylan Q. Mui Two years ago, top officials at the Federal Reserve mapped out a strategy for withdrawing the central bank's unprecedented support for the American economy. The official communiqué was titled "Policy Normalization Principles and Plans," and it was supposed to serve as a rough outline for the tenure of newly installed Fed Chair Janet L. Yellen. Essentially, it consisted of two basic parts: Raise interest rates, and shrink the central bank's massive balance sheet. But now, both of those steps are being called into question as Fed officials grapple with an economy that appears to be stuck in first gear. Instead of executing its exit strategy, the Fed is confronting the possibility that the dramatic measures it took to safeguard the recovery will remain in place indefinitely. "Maybe this is one of those cases where you can't go home again," former Fed chairman Ben S. Bernanke wrote in a recent blog post arguing for a shift in course. The central bank has made no official changes to its strategy, which was adopted with a nearly unanimous vote. But just getting started clearly has been a challenge. Read the rest on Wonkblog.   Chart of the day Painkillers are now more commonly used than tobacco. Christopher Ingraham has more. Top policy tweets "'the root of the epidemic: insufficient access to drug abuse treatment.' hmm. https://t.co/ZU18mWGn9S" -- @interfluidity "Agree with @LHSummers on downsides to raising interest rates right now. An overshoot of 2% inflation is hardly the biggest concern today." -- @krogoff "I will be covering the Fed decision / presser today, which makes me a member-for-a-day of Fed Supernerd Twitter, which still > JOLTS twitter" -- @jimtankersley ADVERTISEMENT   Most Recent Posts from Wonkblog Fed holds off on raising interest rates The central bank says it will wait "for further evidence of continued progress" to raise rates. By Jim Tankersley  •  Read more »   EpiPen CEO to defend lifesaving drug’s soaring price in front of lawmakers By Carolyn Y. Johnson  •  Read more »   CONTENT FROM BP Oil's new safety tools Robots and drones could keep an eye out for oil workers. Trump says he wouldn’t add to the national debt. One of his advisers says he’d borrow $10 trillion. The adviser's remarks seemed at odds with what the Republican nominee himself said in a speech on Thursday. By Max Ehrenfreund  •  Read more »   The Federal Reserve confronts a possibility it never expected: No exit. An exit plan was crafted in 2014. A lot has changed since then. By Ylan Q. Mui  •  Read more »   Why students who do well in high school bomb in college These traits separate the successful students from the not-so-successful ones. By Jeff Guo  •  Read more »   Even an extra five pounds can hurt your job chances The judgement continues By Danielle Paquette  •  Read more »   Prescription painkillers are more widely used than tobacco, new federal study finds In 2015, more American adults used prescription painkillers than used cigarettes, smokeless tobacco or cigars -- combined, the study says. By Christopher Ingraham  •  Read more »   ADVERTISEMENT   Recommended for you   Federal Insider Federal news and policy update, in your inbox daily. Sign Up »         Share Wonkbook:       Twitter      Facebook Trouble reading? Click here to view in your browser. You received this email because you signed up for a Wonkblog newsletter. For additional free newsletters or to manage your newsletters, click here. We respect your privacy. If you believe that this email has been sent to you in error or you no longer wish to receive email from The Washington Post, click here. Contact us for help. ©2016 The Washington Post, 1301 K St NW, Washington DC 20071