Fed paper says risk of falling back to near zero rates still in play

(Reuters) -The prospect of the Federal Reserve once again setting its short-term interest rate target at near zero levels at some point in coming years remains real despite current relatively high levels of short-term borrowing costs, a new paper published jointly between the New York and San Francisco Federal Reserve banks said. The medium- to long-term risk that the central bank’s interest rate target will return to super low levels “is currently at the lower end of the range observed over the past fifteen years,” said a paper that counted New York Fed President John Williams as a co-author. A near-zero federal funds rate target is associated with troubled economic times and their aftermaths.