Some countries experiment with negative rates

Executive Summary

Even as the U.S. Federal Reserve is raising its benchmark interest rate, central bankers in Japan and Europe have cut rates below zero in an effort to kick their economies into a higher gear. A key takeaway:

  • A widening spread between interest rates in different countries can accelerate a capital flow toward the nation with the higher rate, which in turn causes its currency to strengthen.

DOI: 10.1177/237455680311.n6