Negative Interest Rate Policies May Be Part Of The Problem – PIMCO

Negative Interest Rate Policies May Be Part Of The Problem by Scott A Mather, PIMCO

Investors may see these experimental policy moves as damaging to financial and economic stability.

Central banks around the world are developing a newfound fondness for experimenting with negative interest rate policy (NIRP) despite unknown consequences and what appears to be a chilling effect on financial markets.

After initially rejecting the idea given the uncertainties and potential for collateral damage, the European Central Bank in 2014 and the Bank of Japan last month joined the central banks of Denmark, Sweden and Switzerland in negative territory. Now it seems the Fed may be warming to the idea, having gone beyond supportive innuendo to subtle preparation for...