Fed Chair Jay Powell rebuffed the idea of negative interest rates this week. Europe and Japan are already in that territory. richardbeales1 explains why D.C. can afford to say no.
Federal Reserve Chair Jerome Powell said on May 13 that bets that the U.S. central bank is headed toward a negative interest-rate policy are off-base.
The week before, fed funds futures began reflecting for the first time ever a small chance that negative rate policy would find its way to U.S. shores. The market is used to both hedge for and bet outright on the level of the Fed's benchmark overnight interest rate. Speaking at the Peterson Institute for International Economics, Powell said U.S. policymakers instead preferred alternatives such as forward guidance – signals of how long current policy will remain in place – and large-scale asset purchases, also known as quantitative easing, or QE.
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