{"id":17565,"date":"2016-02-09T13:15:09","date_gmt":"2016-02-09T18:15:09","guid":{"rendered":"http:\/\/olduvai.ca\/?p=17565"},"modified":"2016-02-09T13:15:09","modified_gmt":"2016-02-09T18:15:09","slug":"the-negative-rates-club","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=17565","title":{"rendered":"The Negative Rates Club"},"content":{"rendered":"
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The Negative Rates Club<\/a><\/h3>\n

BRUSSELS \u2013 For the better part of a decade, central banks have been making only limited headway in curbing powerful global deflationary forces. Since 2008, the US Federal Reserve has maintained zero interest rates, while pursuing multiple waves of unprecedented balance-sheet expansion through large-scale bond purchases. The Bank of England, the Bank of Japan, and the European Central Bank have followed suit, each with its own version of so-called \u201cquantitative easing\u201d (QE). Yet inflation has not picked up appreciably anywhere.<\/p>\n<\/header>\n

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Despite their shared struggles with deflationary pressures, these countries\u2019 monetary policies \u2013 and economic performance \u2013 are now diverging. Whereas the United States and the United Kingdom are now growing strongly enough to exit their expansionary policies and raise interest rates, the eurozone and Japan are doubling down on QE, pushing policy long-term interest rates further into negative territory. What explains this difference?<\/p>\n

The short answer is debt. The US and the UK have been running current-account deficits for decades, and are thus debtors, while the eurozone and Japan have been running external surpluses, making them creditors. Because negative rates benefit debtors and harm creditors, introducing them after the global economic crisis spurred a recovery in the US and the UK, but had little effect in the eurozone and Japan.<\/p>\n

This is not an isolated phenomenon. By now, most of the world\u2019s creditor countries \u2013 those with large and persistent current-account surpluses, such as Denmark and Switzerland \u2013 have negative interest rates, not only for long-term governments bonds and other \u201criskless\u201d debt, but also for medium-term maturities. And it is doing little good.<\/p>\n

Despite the weak impact of low interest rates, central banks in these economies remain committed to them.<\/p>\n<\/div>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The Negative Rates Club BRUSSELS \u2013 For the better part of a decade, central banks have been making only limited headway in curbing powerful global deflationary forces. Since 2008, the US Federal Reserve has maintained zero interest rates, while pursuing multiple waves of unprecedented balance-sheet expansion through large-scale bond purchases. The Bank of England, the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[57,85,12299,195,233,282,558,1389,8402,661,662,3650],"class_list":["post-17565","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-japan","tag-boj","tag-daniel-gros","tag-debt","tag-ecb","tag-european-central-bank","tag-negative-interest-rates","tag-nirp","tag-project-syndicate","tag-qe","tag-quantitative-easing","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17565","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17565"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17565\/revisions"}],"predecessor-version":[{"id":17566,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17565\/revisions\/17566"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}