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September 11 (Reuters) – Concerns over negative rates of US President Donald Trump have been largely solved on Wall Street, where strategists and traders have stated that such a decision would be unwarranted and extreme, and discouraged given the experience of other countries.
Earlier on Wednesday, Trump had asked the Federal Reserve to lower interest rates in negative territory, a decision that other central banks around the world are reluctantly using to combat weak economic growth that could hurt investors 'and investors' returns. banks.
Here are some comments:
RANDY FREDERICK, VICE-PRESIDENT OF MARKETING AND DERIVATIVES OF CHARLES SCHWAB IN AUSTIN
"Certainly, rates can go down, we know, we had zero interest rates from 2008 to 2015. So we know we can go down to that level, so they can go down to zero, but the question is is whether or not they can become negative.
"Certainly, the current economy does not warrant such an initiative.You can argue that negative interest rates have not had the desired effect, what countries that have applied them forced them to increase their expenses and their inflation.
"It might not even produce the desired effect if it happened, we can not say for sure if it could or could not happen, it may not even be legal to Yes, he wants it done but I am not sure if it would be good for the economy if it happened. "
MARK LUSCHINI, STRATEGIST IN CHIEF OF JANNEY MONTGOMERY SCOTT IN PHILADELPHIA
"This is an extension of the same theme: Trump is putting more pressure on the central bank to make it more accommodative, knowing that other central banks around the world have moved to unconventional extreme levels in an attempt to boost economic activity States would do better to have their interest rate policy more similar to theirs.
"I do not think the Fed will let itself be influenced by what President Trump suggests doing, I think it will continue to work within the limits of his mandate … at the level that, in his view, best fits. " to achieve their goals. "
"If it was an environment in which the Fed would lower rates to zero or negative rates, that would be comparable to an economy that would deteriorate to the point of becoming a very drastic situation … I think we would be in a difficult situation, or rapidly approaching conditions that would be recessionary ".
ART HOGAN, STRATEGY IN CHIEF MARKET, NATIONAL VALUES, NEW YORK
"Most market players would actually like to see interest rates where they are or maybe higher because the reason would be stronger economic growth." The desire for lower rates means you want to have a higher interest rate. If you think you should have zero interest rates, you think your economy should be in shambles.
"The negative interest rate experience has certainly proven to be flawed both at the ECB and Japan, and I certainly think it's something that the United States should probably try to avoid at all costs. "
PETER JANKOVSKIS, DIRECTOR GENERAL OF INVESTMENT AT OAKBROOK INVESTMENTS LLC IN LISLE, ILLINOIS
The market must ignore this. I do not think, certainly that anyone in Europe, thinks that the negative rates are a good thing. Given the lack of success of the policy there, I do not see why we would want to emulate that. The best thing to do (the Fed) is to stay silent and do nothing.
SHAHID LADHA, HEAD OF THE STRATEGY OF THE AMERICAS OF THE G10, BNP PARIBAS, NEW YORK
"Negative federal funds are unlikely given resistance to negative rates from current and past members of the Fed, with little empirical experience that negative rates would help get out of deflation." Next time we reach the ZLB (lower zero bound) in the United States is the balance sheet expansion. "
JON HILL, INTEREST RATE STRATEGIST, BMO CAPITAL MARKETS, NEW YORK
We did not take any political signal from the presidents this morning, and the market also thought a lot. That being said, we are entering a world where monetary policy capacity is a matter of great concern, so it makes sense to look at negative rates.
"The Fed has already been looking for negative returns and my understanding of delivery is that it's possible, but that does not mean that they'll necessarily go in that direction." Expected that they expect that they will reduce bond yields, so set the target range from zero to 25 basis points, and then rely on others. policy tools such as QE or forecasting advice from there.
"I think that a lot of the experience lived by the ECB and Japan is certain, interest rates can become negative, you can force the rates to become negative, but that does not mean not that the potential economic benefits are worth the financial intermediation and stability.
The Fed has never put in place negative key rates. There were negative exchanges on the bills. If we become negative, a lot of things must be in place before that happens. "
"At the moment, the US Treasury can not auction negative-rate notes, and the Treasury should adjust its rules to allow for negative ticket auctions if the Fed turns negative. For me, it's a fine example of an incredible threat up before the Fed has become negative.
(Report by Karen Brettell, Chuck Mikolajczak, Alden Bentley, Sinead Carew, Medha Singh, Megan Davies, Compiled by Megan Davies, edited by Andrea Ricci)
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