Former Federal Reserve Chairman Ben Bernanke cited the benefits of at least keeping the option alive to take short-term rates below zero. Doing so, he said, would give the Fed flexibility at a time when its policy toolkit is limited.
"Categorically ruling out negative rates is probably unwise, as future situations in which the extra policy space provided by negative rates could be useful are certainly possible," Bernanke said in a companion paper to his speech.
"Central bank purchases of longer-term financial assets ... have proved an effective tool for easing financial conditions and providing economic stimulus when short rates are at their lower bound," he said. "The effectiveness of QE does not depend on its being deployed during a period of market turbulence."
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