As month-after-month ticks by without any major action by the Federal Reserve, investors are understandable concerned that the Fed has few viable options when it comes to managing the U.S. economy. In a new report, UBS analyst Samuel Coffin addressed this concern by listing seven takeaways from Janet Yellen’s Jackson Hole speech last week on the Fed’s policy toolkit:

• 1. The option of raising rates “proved effective last December.” Most traders expect another rate hike by the end of the year.
• 2. The Fed will phase out near-term asset sales “at some point after the process of raising the federal funds rate is well under way.”
• 3. The IOER will become an increasingly important tool given the massive balance sheet and near-zero long-run neutral rates.
• 4. The Federal Reserve has the ability to purchase assets and issue guidance that will push down long rates.
• 5. Long-run neutral rates may…

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