Yellen says Fed should begin forward guidance now

Action now could have equivalent impact to negative rates, says former Fed chair

Janet Yellen
Janet Yellen

The Federal Reserve should signal its willingness to adopt a “lower-for-longer” policy now, creating an automatic mechanism to respond to the next economic slowdown, according to Janet Yellen.

The former Fed chair said such forward guidance would cause long-term rates to fall next time the zero lower bound on interest rates bites.

“If the strategy is understood and credible, it should cause long-term rates to decline when the zero lower bound begins to bind by about as much as would occur in

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