Fed's Yellen says future could hold more zero lower bound episodes

WASHINGTON, July 2 Wed Jul 2, 2014 12:14pm EDT

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WASHINGTON, July 2 (Reuters) - The world's central bankers will cut interest rates to zero more often if economists are correct in thinking that many nations have entered a prolonged period of stagnation, U.S. Federal Reserve Chair Janet Yellen said on Wednesday.

Asked about the future of monetary policy at a conference hosted by the International Monetary Fund, Yellen brought up the possibility that "secular stagnation" would make it more likely overnight interest rates would again scrape against the so-called zero lower bound.

"If it is correct that real rates are lower going forward ... I think we will have to worry about these episodes more often," she said. (Reporting by Washington newsroom; Editing by James Dalgleish)

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