USA: Negative interest rates? Trump says yes.

Optimal level of interest rates set by central bank is a sensitive topic

Not even economists agree on how should interest rates be set and whether central banks should be allowed to go below zero.

Central banks in several countries e.g. Japan, Switzerland, Sweden already introduced negative interest rates. What are the implications? Low or even negative interest rates hurt savers the most. It is simple. They just do not see satisfying return on their savings accounts in such scenarios. Responsible savers especially those that are near retirement age are strictly against lowering interest rates.

Donald Trump pushes for the opposite as he called for lowering of interest rates below zero by the Federal Reserve on Wednesday. Such step could threaten the balance on financial markets as it essentially charges those who save their money and rewards those who are willing to lend money. Low interest rates, on the other hand, serve as a stimulus for the economy as they make easier to lend enough money for e.g. homebuyers or business investment.


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