Powell said the Fed would “continue to use our tools to their fullest” until the viral outbreak subsides. But Powell shot down the idea of cutting the Fed's short-term interest rate, which is now near zero, into negative territory, as central banks in Europe and Japan have done. Such a move would require banks to pay interest on cash reserves that they hold at the Fed. Yet negative rates appear to have done little to stimulate the economies of the countries that have adopted them. President Donald Trump, who has frequently expressed his desire for the Fed to adopt negative rates, tweeted Tuesday that “as long as other countries are receiving the benefits of Negative Rates,” the U.S. should also implement them.

Source: Daily Sun May 13, 2020 19:41 UTC