Explainer: How does negative rate policy work?

(Reuters) – U.S. President Donald Trump has suggested that the U.S. Federal Reserve drive interest rates into negative territory. He says his motivation was to refinance the U.S. government’s $22 trillion in outstanding debt and lengthen the amount of time over which it is repaid.

Negative rate policy is something Fed officials have downplayed as appropriate in the U.S. because of the risks it entails and the likely political opposition.

Once considered only for economies with chronically low inflation such as Europe and Japan, however, the idea is becoming a more attractive option for some other central banks to counter unwelcome rises in their currencies.

Full story over at Reuters (5 min read)

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About forkless 49 Articles
Part-time despot and Dutch mini-pancake connoisseur. Has been known to play a musical instrument or two, much to the chagrin of people and pets around him.