The U.S. Federal Reserve might need to cut interest rates to as low as negative 2 percent, far lower than levels other global central banks have tested, a former Fed economist said.The idea is it will force savers to spend. Again, interest rates are intended to largely entice people to call for goods and services they otherwise would not.
That’s what would likely be needed to engineer a recovery if the U.S. economy were to fall into a recession in the next couple of years, Marvin Goodfriend, who was an economist and policy advisor at the Federal Reserve’s Bank of Richmond from 1993-2005, told CNBC’s “Squawk Box” on Thursday.
As one commenter noted, to paraphrase him, it is only likely to cause people to move deposits from Bank of America to the local branch of Sealy Posture-pedic.
Commenters are often better than the article itself.
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