Powell Q&A: The Fed's view on negative rates has not changed

Author: Adam Button | Category: Central Banks

Powell asked about negative rates

Powell Posen
  • We revisited this question back in October and in the minutes then, 'all' members said it wasn't an attractive policy tool
  • One of the reasons we're not looking at it is because we believe we have tools that work
  • The evidence on the effectiveness of negative rates is mixed
  • Fed intents to continue tools it has already tried
  • We have a good toolkit and that's what we will be using
  • We will lend to companies based on 2020 earnings, we hope to be in position to lend to many companies. We're willing to take risk
  • Main Street lending facility will be able to go live in a few weeks
  • Over time, more fiscal help will be needed
The negative rates comment boosted the dollar and sent a shudder through bonds and gold. In USD/JPY you can see the initial drop when he didn't mention negative rates in the formal speech and the reversal when the spoke about them in the Q&A:

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