The European Central Bank commits to negative interest rates for years to come (percentage, purchase)

[RationalExpectations]

The European Central Bank cut its key interest rate and launched a sweeping package of bond purchases Thursday that lays the ground work for what is likely to be a long period of ultraloose monetary policy, jolting European financial markets and triggering an immediate response from President Trump.

The ECB’s pre-emptive move was aimed at insulating the eurozone’s wobbling economy from a global slowdown and trade tensions.

It is the ECB’s largest dose of monetary stimulus in 3½ years and a bold finale for departing President Mario Draghi, who is committing his successor to negative interest rates and an open-ended bond-buying program, possibly for years.

https://emailshare.cmail19.com/t/n/d...fccc0-l-d-r-l/

[Avondalist]

Here is an article about the same with a less-weird link.

https://www.telegraph.co.uk/business...rates-reloads/

[RationalExpectations]

https://www.wsj.com/articles/ecb-lau...te-11568289016

[Listener2307]

Thanks for the info, but as a non-subscriber I could not read the full article.


I find negative interest rates a little puzzling and even a little concerning. That's because I use T Bills to store money. Right now, I get paid around 2% annually for the 4 Week T Bill and since I need money from time to time it works out very well.
If interest rates went negative it may actually pay a little more to keep the money in my mattress, or in a tin can somewhere! I am being a little facetious, of course, since retail interest rates don't really go to zero, but time deposit rates in Japan are paying just a few 10ths of a percentage annually.

[Serious Conversation]

Where do they expect the next round of monetary stimulus to come from when the next recession hits?

[RationalExpectations]

Originally Posted by Listener2307

Thanks for the info, but as a non-subscriber I could not read the full article.

Try the link I posted in post#1 - it is to the same article and should be visible to you. Please let me know if it isn't and I'll try another method.

[SkyDog77]

Originally Posted by Serious Conversation

Where do they expect the next round of monetary stimulus to come from when the next recession hits?

They are seeing a massive savings glut. They are hoping this gets people and firms to start investing instead of saving.

[turkeydance]

"...it may actually pay a little more to keep the money in my mattress, or in a tin can somewhere!"
we are kind of doing that now.
we bought a safe last year to store cash money.
we had two safe deposit boxes at our bank and
wanted to rent more, but they had no openings
and a long waiting list. we are not the only ones.

[ed06288]

so do people just withdraw all their savings in the event of negative interest rates? would there be a run on the banks if a recession hits?

[aridon]

We will be no different in time.

As mentioned above, bank accounts generally are not impacted by this and retail lending rates are rarely zero, and if they are have lots of fees.

Any such move to penalize people for holding money in checking accounts would cause a run on banks and likely far far worse.