Fed’s Yellen Says Negative Rates Would Need Careful Consideration

Fed chief wrote letter to Rep. Brad Sherman

by David Harrison
Market Watch

Federal Reserve Chairwoman Janet Yellen said Tuesday the Fed wouldn’t rule out using negative interest rates to boost the economy but she cautioned such a move would have to be carefully studied.

“While I would not completely rule out the use of negative interest rates in some future very adverse scenario, policymakers would need to consider a wide range of issues before employing this tool in the United States, including the potential for unintended consequences,” she wrote in a letter to Rep. Brad Sherman (D., Calif.) and released by his office.

Yellen also wrote she expected the economy would strengthen and inflation would return to the Fed’s 2% target “over time.”

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