re: UPDATE: Fed Chair Yellen is testifying live on CNBC now. (9:34 am, 2/11/16)

quote:

---

Question: "Does the Federal Reserve have the legal authority to implement negative interest rates?"

Her answer: "Our legal advisers say it is an open question at this point."

Question: "Does the Fed need a bill to authorize negative rates?"

Answer: "We don't know at this point."



This will be interesting going forward IMO. I would say the Fed will be very hesitant to ask Congress for approval on anything. I've read that the Fed could drive lending rates below zero with RRP's without needing Congress' OK.

---

I'm confused why the Fed needs specific authorization to create negative interest rates since it already has authority to set the Fed funds rate. But no one at the Fed has asked my opinion....