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Fed Should Keep Rates Lower for Longer Period

Fed Should Keep Rates Lower for Longer PeriodFed Should Keep Rates Lower for Longer Period

The US Federal Reserve should commit to letting economic booms run on enough to fully offset collapses like the 2007 to 2009 Great Recession, former fed chair Janet Yellen said on Friday, urging the central bank to make “lower-for-longer” its official motto for interest rates following serious downturns, Reuters reported. Yellen’s approach, which comes in the wake of complaints by the Trump administration about fed interest rate hikes, could imply a looser monetary policy stance amid fed officials’ concerns about tight labor markets and greater financial stability risks after a decade of low rates. Those concerns should not be shunted aside, Yellen said, in her most extensive remarks about monetary policy since leaving the fed early in the year. Elaborating on how the central bank should think about what to do if rates have to be cut to zero again in the future and can’t go any lower, she said the fed should promise now that it will keep rates low enough to let the economy make up for lost time.

 

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