The U.S. Federal Reserve might need to cut interest rates to as low as negative 2 percent, far lower than levels other global central banks have tested, a former Fed economist said.
That's what would likely be needed to engineer a recovery if the U.S. economy were to fall into a recession in the next couple of years, Marvin Goodfriend, who was an economist and policy advisor at the Federal Reserve's Bank of Richmond from 1993-2005, told CNBC's "Squawk Box" on Thursday.
Goodfriend, who is currently a professor of economics at Carnegie Mellon University, pointed to data on the eight recessions in the U.S. since 1960.
"In eight of those recessions, the Fed had to push the short rate 2.5 percentage points below the long term rate. Today, the 10-year rate in the U.S. is 1.5 percent," he noted, saying that would indicate that during the next recession, the Fed would need to cut rates as low as minus 1 percent at a minimum.
"In five of those recessions, the Fed had to push the federal funds rate 3.5 percentage points below the 10-year bond rate," he said. "So if that happens this time around, we would have to push the federal funds rate to minus 2 percent."
That's well below where any other central banks have ventured so far. Sweden's central bank, an early adopter of negative rates, has set its benchmark at negative 0.5 percent. The Bank of Japan's rate was set at minus 0.1 percent earlier this year, while the European Central Bank, which first moved its rates into negative territory in 2014, currently has a deposit rate of negative 0.4 percent.
The Fed funds rate has remained in positive territory, with the U.S. central bank last increasing interest rates in December of 2015, its first hike since 2006. That raised the Fed's target rate to a range of 0.25 to 0.5 percent.
To be sure, Goodfriend didn't expect the Fed would be headed there anytime soon, noting that he believed the central bank should actually raise rates before the end of the year.
"The U.S. has near full employment and inflation is moving up toward target," he said. "My own feeling is that the Fed needs to show the flag against inflation, if only to move rates up only slightly, to show that it's on the job."