LONDON (Reuters) – The European Central Bank doubled down on its negative rate policy on Thursday, meaning banks will now have to pay 0.5% interest simply for depositing much of their spare cash with it – an attempt to make them lend more to kickstart the economy. While such a policy is widely considered valid only for economies in Europe and Japan with chronically low inflation and weak growth, the idea is attracting other supporters elsewhere – not least U.S. President Donald Trump, who has labelled U.S. central bankers “boneheads” for not resorting to it. This is how a negative rate policy works alongside some of its potential pitfalls: WHYHAVESOMECENTRALBANKSADOPTEDNEGATIVERATES? To battle the global financial crisis triggered by the collapse of Lehman Brothers in 2008, many central banks cut interest rates near zero. A decade later, interest rates remain low in most countries due to subdued economic growth. With little room to cut rates further, some … [Read more...] about Explainer: How does negative interest rates policy work?
Interest rates policy
By Nick Timiraos WSJ Sun., March 10, 2019 Federal Reserve Chairman Jerome Powell said the U.S. economic outlook is favorable and that the economy doesn’t require higher or lower interest rates now. “Our interest-rate policy is in a very good place right now,” he said during a rare television interview broadcast on CBS Sunday night. Mr. Powell, speaking on “60 Minutes,” said the main risks to the U.S. economy are now from slower growth in China and Europe. The interview was taped on Tuesday at the Fed’s Washington headquarters. Fed officials raised their benchmark rate four times last year to move borrowing costs closer to a so-called neutral level that neither spurs nor slows growth. In December, officials projected they would need to raise rates between one and three more times this year. Mr. Powell said Sunday that the current interest-rate setting is “roughly neutral.” Article Continued Below Mr. Powell … [Read more...] about Fed Chairman Powell Sees No Need to Change Rate Policy
By Nick Timiraos WSJ Sharon Nunn WSJ Fri., March 8, 2019 The Federal Reserve doesn’t need to change its interest-rate policy right now against a mixed backdrop of restrained price pressures, a generally strong U.S. labor market and slower global growth, Chairman Jerome Powell said in a speech prepared for delivery Friday night. “With nothing in the outlook demanding an immediate policy response,” the central bank has “adopted a patient, wait-and-see approach to considering any alteration in the stance of policy,” Mr. Powell said in remarks to be delivered at the Stanford Institute of Economic Policy Research in Stanford, Calif. Fed officials raised the short-term benchmark rate in December to a range between 2.25% and 2.5%, but have since shelved plans for further increases after markets swooned late last year on concerns over slowing global growth. Mr. Powell’s remarks followed the European Central Bank’s surprise … [Read more...] about Fed Chief Says No Need to Change Interest Rates at Present
By Ann Saphir PALO ALTO, Calif. (Reuters) - With the U.S. economy facing significant headwinds, the Federal Reserve should align its balance sheet policy with its new "patient" approach to interest rates, San Francisco Federal Reserve Bank President Mary Daly said on Wednesday. "We don't want the balance sheet to be working at cross purposes with our interest rate policy," Daly told the Stanford Institute for Economic Policy Research. The Fed has been shrinking its $4 trillion (3 trillion pounds) balance sheet by as much as $50 billion a month for more than a year, which investors say has been tightening financial conditions even as the central bank last month signalled it is putting its three-year-long campaign to raise interest rates on hold. Rising downside risks, including slowing global growth, tighter financial conditions and rising uncertainty over trade and other policies, justify that pause in rate hikes, Daly said on Wednesday. And with U.S. interest rates now within a … [Read more...] about Fed wants balance sheet to align with rate policy
SECTIONS Search E-edition Home Customer Service Customer Service Newsletters Obituaries News All News Local news Crime Politics The Buzz Nation & World 913 Cass County Lee's Summit Video Photos Sports All Sports Chiefs Royals Royals photos Sporting KC Olympics Kansas Missouri K-State High School Scores & Stats NASCAR Outdoors NBA Buy Tickets Blogs & Columns The Full 90 Campus Corner For Pete's Sake Sam Mellinger Vahe Gregorian Politics Politics Elections The Missouri Influencer Series Opinion All Opinion Editorials Influencers Opinion Letters to the Editor Colleen Nelson Derek Donovan Dave Helling Melinda Henneberger Steve Kraske Toriano Porter Steve Rose Guest commentary Syndicated columnists Submit a Letter Entertainment Entertainment … [Read more...] about ‘We can be patient’ on raising interest rates, Federal Reserve policymaker says in KC