Fed Study Finds 9% Chance of Rates Hitting Zero in Medium Term

The Federal Reserve can’t assume its benchmark lending rate won’t return to zero at some point in the future, according to researchers from the Federal Reserve Banks of New York and San Francisco, who included New York Fed President John Williams.

The authors, in a blog post published Monday, found a 9% probability the federal funds rate would hit the so-called zero lower bound, or ZLB, over a seven-year horizon, with the current high level of interest-rate uncertainty contributing to that risk.

“Compared with the past decade, current data show that expected levels of future interest rates are high,” ...