Yellen backs away from using negative rates in downturn

WASHINGTON (MarketWatch) - Federal Reserve Chairwoman Janet Yellen on Tuesday distanced the U.S. central bank from using negative interest rate in the event of another economic downturn. The Fed has the legal authority to push rates into negative territory, Yellen said, but, after consideration has cooled on the unconventional tool, she said. "We have identified significant shortcomings of that type of approach," Yellen said. "We don't think we are going to have to provide accommodation and if we do [negative rates] is not something on our list,' the Fed chairwoman said. Many leading central banks around the word, including the Bank of Japan and the European Central Bank, have cut rates into negative territory in an effort to combat deflation.

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