October 15, 2015

REAL RATES ARE ALREDY USURIOUS:

Negative rates work their way on to radar for a few at the Fed (Reuters, 10/15/15)

Two influential Fed governors this week urged a delay in tightening despite repeated messages from Chair Janet Yellen and others that "liftoff" was likely to come this year.

Some Fed officials also appear to have reconsidered a stimulus tool that had been dismissed as too risky: negative interest rates.

At least six current Fed policymakers over the last two weeks have publicly discussed charging banks to park funds at the central bank. Four suggested it would be worth considering if the recovery falters badly and one, Minneapolis Fed President Narayana Kocherlakota, urged an immediate cut below zero.

"Once unthinkable, the fact negative rates are creeping in the public debate mean we can't dismiss them anymore," said Standard Chartered senior economist Thomas Costerg.

Posted by at October 15, 2015 6:08 PM
  

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