Trump says he ‘could get used to’ negative interest rates as he knocks the Fed: ‘Love that’

Trump says he ‘could get used to’ negative interest rates as he knocks the Fed: ‘Love that’

President Donald Trump on Tuesday spoke glowingly of negative interest rates and took another shot at the Federal Reserve to a global audience.

“Even now as the United States is by far the strongest economic power in the world, it’s not even close. … We’re forced to compete with nations that are getting negative rates, something very new,” Trump said in his address at the World Economic Forum in Davos, Switzerland. “Meaning, they get paid to borrow money, something I could get used to very quickly. Love that.”

Several central banks have adopted negative interest-rate policies over the past year in hopes of jolting their economies. Most notably, the European Central Bank and the Bank of Japan implemented this policy amid stubbornly low inflation.

This has led to sovereign yields in Japan and Germany to trade below zero. By comparison, U.S. Treasury yields and the Federal Reserve’s overnight rate are high, which Trump contends puts the U.S. at a disadvantage relative to the rest of the world. The 10-year Treasury yield hovered above 1.8% on Tuesday.

“Nevertheless, we still have the best numbers that we’ve had in so many different areas. It’s a conservative approach and we have this tremendous upside potential,” he said, touting possible bilateral trade deals and deregulation measures.

Economists are divided over the stimulative effects of negative interest rates. Some fear negative rates can keep an economy in a subdued state, rather than boost it from lackluster growth.

https://www.cnbc.com/2020/01/21/davos-2020-trump-says-he-could-get-used-to-negative-interest-rates-love-that.html

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