The Federal Reserve, on Wednesday, kept interest rates unchanged near zero and indicated that rates will remain low for a prolonged time.
Further, the dot plot of committee members’ rate expectations showed little dissent about keeping rates low through 2022.
However, no member plotted negative rates, contradicting the popular narrative that the US central bank cut rates below zero by the end of the next year.
Fed officials have made it clear multiple times over the past few months that they are unlikely to implement negative rates and would focus on adjusting the pace of bond purchases if required.
In fact, the recent rise in longer duration bond yields has raised the possibility of the Fed implementing yield curve controls. The policymakers did discuss that option on Wednesday, Powell said in his introductory remarks.
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