Fed May Adopt Yield-Curve Caps, Ex-Chairs Bernanke, Yellen Say
Former Fed Chairs Ben Bernanke and Janet Yellen warned that the U.S. economic recovery from the coronavirus shock could be slow and uneven and said the central bank may opt to cap yields on Treasury securities to help it along.
“It is possible, though not certain,” that the Fed will implement yield-curve control, theywrote on the Brookings Institution website, laying out testimony delivered Friday to the House Select Subcommittee on the Coronavirus Crisis.
The Fed has looked into the possibility of capping yields on short- to medium-term Treasuries though policy makers have suggested that further study is needed before deciding whether or not to go ahead.
Yellen told the committee that it would be a “catastrophe” if Congress decided not to continue enhanced unemployment insurance that is due to expire at the end of this month. “We need the spending that those unemployed workers can do,” she said.
77,255 in U.S.Most new cases today
-5% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23
-1.132 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23
4.4% Global GDP Tracker (annualized), June