Powell doesn’t see the Fed ever using negative interest rates, even in times of crisis

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Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., on Wednesday, July 31, 2019.Andrew Harrer | Bloomberg | Getty ImagesThis is a breaking news story. Please check back for updates.Federal Reserve Chairman Jerome Powell said that he does not see the Fed using negative interest rates in the future. “I do not think we’d be looking at using negative rates, I just don’t think those will be at the top of our list,” Powell told reporters after the Federal Open Market Committee meeting, when asked about what tools would be considered if economic weakness continues. “If we were to find ourselves at some future date again at the effective lower bound, again not something we are expecting, then I think we would look at using large scale asset purchases and forward guidance,” Powell added. Powell said the Fed entertained the idea of negative interest rates during the financial crisis, but opted against it. Instead, the central bank used a lot of aggressive forward guidance and large scale asset purchases. “We feel that they worked fairly well,” said Powell. “We did not use negative rates.” Powell’s sentiment contrasts many of the central bankers around the world. More than $17 trillion worth of government bonds trade at negative yields and investors have debated whether the U.S. could get sucked into the global trend if weakness persists. Although the amount of global debt with negative yields continues to balloon as central banks scramble to react to a slowing economy, Powell shut down the notion that the Fed would address economy weakness in that way. Before the press conference on Wednesday, the central bank approved a quarter-point interest rate cut.The FOMC announced that it would take down its benchmark overnight lending rate to a target range of 1.75% to 2%. That comes nearly two months after the policymaking Federal Open Market Committee went ahead with its first cut since the financial crisis.


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