Carol- Admin
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Join date : 2010-04-07
Location : Hawaii
Carol Mon Feb 15, 2016 9:09 am
Negative rates are becoming the "new abnormal" in a shaky world economy. With fresh panic hitting markets, are we finally hitting the limits of what monetary policy can achieve?
The world's tentative experiment with negative interest rates got off to an unremarkable start.
Sweden's Riksbank - the world's oldest central bank - became the first major monetary authority to cross the rubicon and take its main policy rate into the red exactly a year ago to the month.
The Riksbank’s move followed the likes of Switzerland and Denmark, who had turned negative in a bid to stimulate flagging inflation and halt the punishing appreciation of their currencies.
The "new abnormal"
Global markets have crashed into bear market territory. A cocktail of fears over the collapsing price of oil, the creaking health of the world's biggest banks and China’s competence in managing its economic slowdown, has sparked fears that investor panic may lead the world into a new downturn.
Bank shares have been in the eye of the selling storm and have concentrated minds on just what negative interest rates mean for the financial system.
These jitters were set off by the Bank of Japan's shock decision to join the negative rate club at the end of January. For the first time in the negative rates experiment, it seemed monetary authorities were getting desperate in their attempts to stimulate growth and inflation with their limited policy tools (see map above).
More:http://www.telegraph.co.uk/finance/economics/12149894/Mapped-Why-negative-interest-rates-herald-new-danger-for-the-world.htmlLast edited by Carol on Mon Feb 15, 2016 7:16 pm; edited 1 time in total
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What is life?
It is the flash of a firefly in the night, the breath of a buffalo in the wintertime. It is the little shadow which runs across the grass and loses itself in the sunset.
With deepest respect ~ Aloha & Mahalo, Carol
