Negative U.S. Interest Rates: A Primer (Just In Case)
James Picerno | Sep 19, 2015 11:51PM ET
The crowd is buzzing over the possibility that the Federal Reserve may be considering negative interest rates. Where did that notion come from? Well, from the horse’s mouth. As noted earlier, an unnamed FOMC member recommended—for the first time in Fed history in terms of a formal, public document—that the central bank’s policy rate be set slightly below zero for this year and in 2016, as per two dots in yesterday’s dot plot (see chart below). It’s an idea that seems to be catching on… again. The Bank of England’s Andy Haldane she insisted. “It was not one of our main policy options” under consideration. Ok, but is it under consideration going forward?
In any case, the rumor mill has been set in motion and the machinery of inquiry and analysis has been let loose on this formerly esoteric subject in the annals of US central banking. Is it ready for prime time? Maybe not, but to be fair it was the Fed that let this gnarly monetary cat out of the bag.
Meantime, there’s a bull market in freshly minted theories about what the two subzero dots mean… or don’t. To get up to speed, here’s your short list of background intelligence for considering the prospect of going negative (maybe) with US monetary policy.
Current News/Analysis on the Negative Rate Dots
● Should interest rates go negative in the US? | Bloomberg
General Research/Commentary On Negative Rates
● How Will Negative Rates Change the Rules of the Game? | BIS
Recent News Stories On Negative Rates
● Why use negative interest rates? | Bloomberg
Get The News You Want
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