U.S. Federal Reserve policymakers say they will do what it takes to cushion an economy crushed by the widespread lockdowns aimed at slowing the coronavirus spread, but there's one thing they probably won't do: take interest rates below zero.
- U.S. Federal Reserve policymakers say they will do what it takes to cushion an economy crushed by the widespread lockdowns aimed at slowing the coronavirus spread, but there’s one thing they probably won’t do: take interest rates below zero.
Last week, traders in futures tied to the Fed’s policy rate began pricing in — for the first time ever — a small chance of negative U.S. interest rates next year. On Monday they had mostly retreated from those bets, though contracts for October 2021 did reflect an expectation for below-zero rates. And in the current crisis, they have said that negative rates would be particularly ineffective because it’s not the price of money but rather government restrictions and concern for public health that are keeping people and businesses from spending money.
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