Discussion Board

Trump wants to go negative on interest rates

Trump wants to go negative on interest rates

“The federal reserve should get our interest rates down to zero or less” trump tweeted. Federal bank has cut interest rates for third time in a row now. But still president Trump insists Fed to go zero or negative interest rates. He mentioned in his tweed that we should pay less interest than our others.

With negative interest rates, people should pay interest to keep their savings safely in banks. It was introduced by Danish bank followed by eurozone, Switzerland, Japan and Sweden to help their weak economy. The aim of policy is to encourage individuals to lend money rather than pay fee to save it and banks to lend money more.

Fed has cut interest rates to near zero during recession but never went below that. It should definitely be a question for US if negative interest rates should be implemented. And would it help getting out of recession quickly?

“Euro is dropping against the Dollar like crazy, giving them a big export and manufacturing advantage. And the Fed does nothing.” President Trump tweeted. Dollar is the strongest currency, but manufacturers that make products for sale outside the US are affecting badly.

Negative rates would boost American exports and increase prices of imported goods.

This policy would benefit lenders and borrowers, but it would badly affect American savers. Small savers who save their money in savings account shouldn’t be charged like eurozone countries to leverage negative rates policy.

 

References:

https://www.nytimes.com/2019/09/11/business/economy/trump-fed-negative-interest-rates.html

https://www.dw.com/en/interest-rates-trump-wants-to-go-negative-but-does-the-fed/a-51024545

 

E-mail me when people leave their comments –

You need to be a member of UNH Economics Collective to add comments!

Join UNH Economics Collective