Question

A definition of a recovery. Please inform the Committee whether the need for accommodative monetary policy is over or not.

Answer 1

Recovery is part of business cycle ( after recession) in which employment, output, national income and prices surpass peak levels achieved prior to downfall.

You have not mentioned to which Committee. Anyway we can inform Committee that need for accommodative policy is over. The reasons is unemployment has fallen below natural rate of unemployment level. The economy is progressing steadily. There are chances of increase in inflation and interest rates need to rise. But such rise should be slow because moderate inflation is good for economy as it increases investment, expectations etc. Furthermore interest rates are at the historical low levels. There is need to revise interest rate but slowly and steadily.