A traditional liquidity trap is problematic for a New Keynesian policy maker because there is a

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In a traditional liquidity trap, the interest rate is already at zero, which limits the ability of the New Keynesian policy maker to stimulate the economy through conventional monetary policy means. However, if there is a positive output gap (i.e. potential output is greater than actual output), there is a risk of inflation if the policy maker tries to stimulate the economy further. Therefore, a traditional liquidity trap with a positive output gap but a zero lower bound on interest rates is problematic for a New Keynesian policy maker.

A Traditional Liquidity Trap Is Problematic for a New Keynesian