Trump Continues Attack On Fed, Asks For Zero Or Negative Rates Of Interest.

0
613

On Thursday, Donald Trump, the president of United States has called for the interest rates to be engineered to zero or less than zero by the Federal Reserve. Trump appealed for negative yields with the belief that it will help the United States in curbing the borrowing costs and stimulating growth.

Continuing to lash out at Federal Reserve’s policy on Twitter, the president said on the social media platform that as the economy of the world is facing the downside risks of the trade war between United States and China, the Central bank was missing out on an opportunity that came due to the low yields. The president even called the Central bank Boneheads for letting go of what he considers an opportunity that will come once in a lifetime

Trump’s frustrations with Jerome Powell, Fed Chairman were reiterated with the tweet. Powell, he believes has not been easing the monetary policy in a manner that is aggressive enough specially while there is a global slowdown that is going on.

While the negative rates concept seems attractive theoretically, effects of the negative rates are not as appealing in reality as they appear. The risk of default becomes nil virtually but the global debt at $16 trillion as per the current estimate is considered bad for those who save and therefore leads to an erosion in the profitability of banks.

It also again highlighted the growing fascination of President Trump with negative rates, which is a condition in which investors sacrifice yield for safety as they pay the issuer of the bond.

Economist believes that Trump being a property developer, he is thinking from the point of view of a buyer when it comes to negative rates.

Edward Malone
Author Details
CONTRIBUTING AUTHOR At Industry Research Reports

Edward Malone has studied masters in particle physics and astrophysical sciences and is connected with us from last 4 Years. He works as a contributor to our portal. He has a superior track record of success that comprises several industry awards. He is interested in outer space and often writes about astronomy. Edward also writes about environmental articles that include current climate issues and advice on how to address them. As an active member of the portal and a true professional, Edward is committed to helping clients with their requirements. He often attends industry training and certification programs.

LEAVE A REPLY

Please enter your comment!
Please enter your name here