Can the Fed avoid negative interest rates in the next downturn?

yahoo2021-07-14

The Federal Reserve managed to avoid turning to negative interest rates through the pandemic-induced recession of 2020. But if the economy faces another downturn, will the central bank be backed into ...

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Comments

R2D2
2021-07-14
R2D2
They would stay our of the game
Des123
2021-07-14
Des123
Fantastic
EHG
2021-07-14
EHG
Like
sprinkles
2021-07-14
sprinkles
Like
ElenaM
2021-07-14
ElenaM
[Smile]
Beez1119
2021-07-14
Beez1119
[微笑]
- Beez1119:
  [微笑]

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But if the economy faces another downturn, will the central bank be backed into ...</p>\n\n<a href=\"https://finance.yahoo.com/news/can-the-fed-avoid-negative-interest-rates-in-the-next-downturn-133021653.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SPY","symbol_name":"标普500ETF","start_time":0,"source_url":"https://finance.yahoo.com/news/can-the-fed-avoid-negative-interest-rates-in-the-next-downturn-133021653.html","article_id":"1171237961","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1171237961","pubTimestamp":1626221936,"columns":[],"sourceInfo":{"source_id":"lsy1584348713084","name":"yahoo"},"weMediaInfo":null,"summary":"The Federal Reserve managed to avoid turning to negative interest rates through the pandemic-induced","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SPY":"标普500ETF",".IXIC":"NASDAQ Composite",".DJI":"道琼斯",".SPX":"S&P 500 Index"},"translate_title":"美联储能否在下一轮低迷中避免负利率？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":0.9,".IXIC":0.9,".SPX":0.9,"SPY":0.9},"content_text":"The Federal Reserve managed to avoid turning to negative interest rates through the pandemic-induced recession of 2020. But if the economy faces another downturn, will the central bank be backed into short-term borrowing rates below zero?\nIn aUBS surveyof almost 30 central banks around the world, 21% of respondents said they could see the Fed turning to negative interest rates if needed.\nThe concern: With U.S. short-term rates yet again backed up at near-zero, a Fed that may beslower to raise interest rateswill not have the room to again cut rates in the next crisis.\nBut Fed officials, who managed to avoid the tool through an economic shutdown of unprecedented scale, have made it clear that negative interest rates are low on their lists of preferred policy tools.\n“Negative rates I think have a worse cost-benefit relationship than the other tools that we have,” New York Fed President John Williams told reporters on Monday morning.\nAnOctober 2019 discussionof negative rates noted that all of the Fed’s policy-setting members disliked the idea of implementing the policy in the U.S.\n“The committee’s view on negative rates really has not changed. This is not something we’re looking at,” Powell said in May 2020.\nStill, the central bank hasn’t explicitly ruled out its possible use in the future.\n‘Rather stay out of that game’\nNegative interest rate policies, such as those deployed by the European Central Bank and the Bank of Japan, attempt to stimulate the economy by penalizing banks for parking money at the central bank. The idea is to push banks to lend into the economy by further discouraging saving.\nBut Fed officials have worried about the distortions that could come with negative short-term rates in the U.S., where the importance of U.S. government debt markets and the U.S. dollar could have wide-reaching and international financial stability consequences.\n“You’ve got Japan and Europe mired in negative interest rates,” St. Louis Fed President James Bullardtold Yahoo Finance on May 24. “We’d rather stay out of that game.”\nUBS noted that the $4.5 trillion money market, which is heavily reliant on short-term rates, is too large — and too interconnected to public and private sectors — to be toyed around with.\n“Implementing a negative interest rate policy in the U.S. would be too much of a disruptor (not the same issue overseas),” UBS Chief Investment Officer Solita Marcelli wrote.\nThe playbook in the next crisis might therefore look similar to the one used last year: near-zero rates, aggressive asset purchases, and an armada of liquidity facilities to backstop various financial markets.\nWilliams specifically said the Fed's purchases of U.S. Treasuries and agency mortgage-backed securities have been \"critically important.\" The Fed has only recently begun conversations about slowing the pace of those purchases, as the central bank's balance sheet soars past the $8 trillion mark.\n\n“These tools, they’re not really as unconventional as they used to be,” Williams said Monday.\nThe UBS survey notes that the Fed could still get creative if it needed to. About 45% of respondents said they could see the Fed buying stocks and about 65% said they could see the Fed targeting medium- to longer-dated bond yields (through a tool calledyield curve control) in the next crisis.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":145244447,"gmtCreate":1626227474789,"gmtModify":1703755896641,"author":{"id":"3577945319352371","authorId":"3577945319352371","name":"R2D2","avatar":"https://static.tigerbbs.com/0b82ed09a21fdbec2d56ea0aca3b5342","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3577945319352371","authorIdStr":"3577945319352371"},"htmlText":"They would stay our of the game","listText":"They would stay our of the game","text":"They would stay our of the 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