0% Interest Rate an Option, says Fed Gov
WASHINGTON - The Federal Reserve could be forced to keep interest rates low or even reduce them to 0% if the rate of inflation continues to fall even if the economy picks up in the second half of the year as some experts have predicted, said Federal Reserve Gov. Ben Bernanke. In a speech to the Economics Roundtable at the University of California-San Diego, Bernanke forecasted a lack of demand and slow job creation will continue and result in lower inflation or even deflation, a widespread fall in prices. He said keeping rates at current lows "for an extended period" might be sufficient to support the economy, but he left open the possibility the Fed could use less traditional methods.