Fed won’t take rates negative – Fund managers, economists
Addressing the Reuters Global Market Forum, noted fund managers and economists said that US Federal Reserve (Fed) is unlikely to steer the Fed fund rates into the negative territory, as reflected by the Fed fund rates futures by early 2021.
Key quotes
“The Fed isn’t in negative territory and has said it won’t go there - it just does balance sheet expansion instead. Money market funds would collapse in the U.S. if they had to input negative rates.”
“The debate has moved now to the longer-term impact of government debt and central bank balance sheet expansion.”
“No. The Fed will be very reluctant for target rates to go negative.”
“It would be very unlikely for them to cut into negative territory. A significant segment of the American population has their life savings in bank accounts, not in stocks or bonds or funds, and if they get into negative rates, there will be incredible political consequences. People are already concerned about low rates of interest they are getting in the bank.”
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
