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Janet Yellen Advocates ‘Lower-for-Longer’ Rates Plan for Future Slumps

  • Fed should consider ‘lower-for-longer’ policy in advance
  • Yellen says approach could lead to an economic ‘boom’
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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.

In a presentation Friday at the Brookings Institution in Washington, Yellen said such an approach would commit the Federal Open Market Committee to compensate for its inability to reduce rates below zero by holding them at lower levels longer than would be otherwise justified after the economy recovers.