“NEW YORK (CNNMoney) — Housing is still one of the biggest drags on U.S. economic growth, but don’t look to the Federal Reserve for help. The central bank may have few tools left to fix it.
That’s the basic hypothesis of a paper top economists presented to a room full of monetary policy elites in Manhattan Friday.
The US. Monetary Policy Forum is a one-day meeting presented by the University of Chicago Booth School of Business. In attendance are Federal Reserve officials, members of foreign central banks and economists from some of the world’s largest banks and top universities.
At Friday’s meeting, these top thinkers focused heavily on weaknesses in the housing market, and the mood was not exactly upbeat.
Traditionally, the Fed could aid the housing market during tough times, by lowering its key interest rate and thereby lowering mortgage rates. But the Fed’s interest rate is already near zero and mortgage rates are already at record lows — and yet the housing market remains in a slump.
Could the Fed be out of bullets when it comes to this key part of the American economy?
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