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:
USDJPY

See here for global coronavirus case data
By continuing to browse our site you agree to our use of cookies, revised Privacy Notice and Terms of Service. More information about cookiesClose