As recession fears mount in the U.S., Fed Chair Janet Yellen conceded there's a "chance" of a downturn ahead. She also said the central bank is studying whether negative interest rates would help should conditions worsen.
"There is always some chance of recession in any year," she said. "But the evidence suggests that expansions don't die of old age."
Asked by Republican Sen. Bob Corker whether the monetary policy-making Federal Open Market Committee would consider going to negative interest rates, which would entail charging banks to store reserves at the Fed, Yellen left the door open. She repeated a statement she said Wednesday that the Fed had considered negative rates in 2010 but decided that wouldn't be the best course at that time.
"In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again, because we would want to be prepared in the event that we would need (to increase) accommodation. We haven't finished that evaluation. We need to consider the institutional context and whether they would work well here. It's not automatic," she said.
