Rate commitment could hit Fed credibility-Broaddus

Central Banking staff
17 Jun 2003

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Richmond Fed president Alfred Broaddus has warned the Federal Reserve may lose credibility if a commitment to hold interest rates down to fight deflation becomes difficult to maintain due to an unexpected shift in the economy's fortunes.

Source: Reuters

A commitment to hold short-term rates at a set level to fight deflation could wind up damaging the Federal Reserve's credibility, Richmond Federal Reserve President Alfred Broaddus said on Friday 13 June.

With overnight borrowing costs at a 42

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