IMF supports move to negative rates by some central banks

334580_orig

https://ca.news.yahoo.com/imf-supports-move-negative-rates-central-banks-190126848–business.html

The International Monetary Fund said on Sunday that a move to negative rates by some of the world’s central banks would help deliver extra monetary stimulus and ease lending conditions.

Six of the world’s central banks have introduced negative rates, most notably the Bank of Japan and the European Central Bank, and around a quarter of the world economy by output is now experiencing official rates that are less than zero.

They have achieved this by cutting deposit rates into negative territory, ranging from minus five basis points in Hungary to minus 125 basis points in Sweden – essentially a “tax” on deposits.

“Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall, they help deliver additional monetary stimulus and easier financial conditions, which support demand and price stability,” the IMF’s financial counselor and director of monetary and capital markets, Jose Vinals, wrote in a research paper.

The report was published ahead of next week’s International Monetary Fund meetings in Washington.

Negative interest rates were first adopted in Sweden, Denmark and Switzerland in a bid to halt currency appreciation against the euro and Hungary’s central bank has also joined the move.

Critics argue that the move to negative rates, especially in Japan where the central bank has failed to ignite growth or shift inflation upwards, are a sign of desperation. What is needed they say is additional government spending instead of more loose monetary policy.

In addition, they charge that the move may damage the economy by inflating financial market asset bubbles and squeezing bank profit margins.

The IMF said that evidence so far showed negative rates had encouraged investors out of low risk government bonds and reduced borrowing costs for companies.

———–

of course they do!

“Negative interest rates were first adopted in Sweden, Denmark and Switzerland in a bid to halt currency appreciation against the euro and Hungary’s central bank has also joined the move. Critics argue that the move to negative rates, especially in Japan where the central bank has failed to ignite growth or shift inflation upwards, are a sign of desperation.”

indeed..

“Six of the world’s central banks have introduced negative rates”

upside down world..

401

~ by seeker401 on April 15, 2016.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: