Fed Chair maneuvered his way around the negative rates verbal landmine in today’s webinar at the Peterson Institute, stating the Fed isn’t looking at negative rates, preferring to focus on the importance of fiscal aid (more below). The is the biggest loser of the day after the Reserve Bank of New Zealand expanded its QE and said:
“a negative OCR will become an option in future.”
“With interest rates at ZLB and no desire to use negative interest rates, the Fed will rely heavily on existing tools such as forward guidance and balance sheet policies.” Basically, Powell is seeking new ways to say negative rates are not an option but would not rule them out. Even hawkish Cleveland Fed’s Mester is personalizing the issue, saying “I still am not thinking that would be a go-to tool for me”.
Meanwhile, the RBNZ increased bond purchases to a NZ$ 60 billion, indicating that “discussions with financial institutions about preparing for a…
