Monetary policy in the United States and other developed countries “is reaching its limits,” but the Federal Reserve has not yet run out of responses to a potential slowdown, former Fed Chairman Ben Bernanke wrote Friday.
In a blog post for the Brookings Institution, he argued a “balanced monetary-fiscal response” would better boost the economy than monetary tools alone. Bernanke assessed policy options for the Fed, saying negative interest rates hold “modest benefits” but are unlikely.
“I assess the probability that this tool will be used in the U.S. as quite low for the foreseeable future. Nevertheless, it would probably be worthwhile for the Fed to conduct further analysis of this option,” Bernanke wrote.