The Investing Implications Of Negative Interest Rates

The Investing Implications Of Negative Interest Rates by Russ Koesterich, CFA – BlackRock

BlackRock’s Russ Koesterich and investment strategist Terry Simpson explain how negative interest rates may impact various asset classes.

It’s hard to miss all the media mentions lately surrounding negative interest rate policy (NIRP).

A handful of developed countries across the globe–including Japan–have implemented negative interest rates lately, as the chart below shows, and the Federal Reserve (Fed) is analyzing the implications of moving the U.S. Federal Funds rate into negative territory too.

It’s no wonder, then, that many investors are asking how negative rates could impact portfolios.

The technical details of negative interest rates

Simply put, when rates are negative, a depositor (think a retail bank) has to pay...