Yellen says Fed should begin forward guidance now

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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