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‘No Means No’: Critics Plead With Fed To Avoid Negative Rates Amid Pressure From Trump, Markets

"We are grasping at straws and if push comes to shove, anything goes".

"The committee’s view on negative rates really has not changed. This is not something that we’re looking at", Jerome Powell said Wednesday, after regaling America with a truly dour take on the outlook for the world's largest economy absent sufficient fiscal support. "I know there are fans of the policy, but for now, it’s not something we’re considering", he added. "We think we have a good toolkit, and that’s the one we’ll be using". When it comes to "fans" of negative rates, Donald Trump can be counted. The president on Tuesday referred to sub-zero policy rates as a "GIFT" (all-caps in the original tweet) and implored the Fed to avail itself of the opportunity to push rates below zero. Read more: Trump To Powell On Negative Rates: Don’t Look A ‘GIFT’ Horse In The Mouth! Powell's remarks suggest the Fed will resist the pressure - as long as it can, anyway. His colleagues offered similar push back on Monday and Tuesday. Market bets on NIRP from the Fed were pressed initially as Powell emphasized structural risks to the economy, but were trimmed once he explicitly addressed the point. Last week, STIRs abruptly began to price in an adventure below zero as early a
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4 comments on “‘No Means No’: Critics Plead With Fed To Avoid Negative Rates Amid Pressure From Trump, Markets

  1. Real rates might climb to 3% or who knows. Then what are they going to do.
    The five year chart looks like it can’t wait to crack and make a move to zero.

  2. Accelerating on the road to insolvency of the Social Security and Medicare Trust Funds might be a bit of drawback too. NIRP coupled with a repeal of Obamacare might lead to Medicare being bankrupt within two fiscal years.

  3. Where oh where can we put our money safely????

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