Will the Federal Reserve introduce negative interest rates? It is possible, but it will probably leave that policy tool until the next financial crisis.
That has not stopped President Donald Trump from continually pushing the central bank to impose subzero rates.
He recently tweeted:
“As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT’. Big numbers!”
Although rates are at near zero, Fed officials have admitted their skepticism. Federal Reserve Bank of Chicago President Charles Evans said it requires more study, but he doesn’t think it will be implemented. St. Louis Fed President James Bullard noted that it is “not a good solution.” Dallas Fed’s Robert Kaplan revealed he opposes the policy.
On Wednesday, Fed Chair Jerome Powell is expected to pour cold water on the Keynesian mechanism.
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