The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie
Your feedback is important to us!
We invite all our readers to share with us their views and comments about this article.
Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.
Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (http://bit.ly/vDisqus)
Former Federal Reserve Chair Janet Yellen says the central bank should consider deliberately courting an economic boom to make up for a bust by promising to keep interest rates "lower-for-longer" after they are cut to zero.Yellen joins another former Fed chairman, Ben Bernanke, in advocating for a strategy that would change central bank behavior temporarily, when rates hit zero.Fed research suggests that the zero lower bound episodes will occur much more frequently in the future, in part because low productivity growth and an aging society will help keep rates much lower throughout the economic cycle than they have been in the past.For the strategy to work best, the Fed needs to make a "credible statement" endorsing it before the next economic downturn hits, Yellen said. The central bank could complement that by emphasizing that such an approach would likely result in a period of "exceptionally low unemployment" and inflation above its 2 percent target.
FOLLOW THIS ARTICLE