People who are already struggling with debt problems could be in for even tougher times in the months ahead as the head of the U.S. Federal Reserve considers the possibility of lowering interest rates even further – possibly even going to a negative interest rate policy.
Negative interest rates have become a reality for many countries throughout the world. The central banks in Japan, Switzerland, and Sweden have interest rates that are currently below zero.
Although the United Federal Reserve has not yet instituted negative interest rates, many economic experts and market observers believe that an interest rate below zero could be forthcoming. In fact, some experts believe that the Fed is already taking steps in anticipation of a negative interest rate policy. For instance, one of the presenters at a recent Federal Reserve retreat made the case for implementing an interest rate policy with “negative nominal interest rates.”
Why Negative Interest Rates?
If and when the Fed institutes negative interest rates, the rationale will be that doing so could encourage greater spending by consumers, which will, in turn, spur economic growth on a larger scale.
The problem is that a negative interest rate could also have dire implications for the economy, as people who are attempting to save up for the future are essentially punished for doing so. With more and more people in the US already struggling to save up for a transition from being renters to being homeowners, negative interest rates could be catastrophic.
To learn more, check out the Yahoo.com article, “The Fed May Be Preparing for the Unthinkable – Negative Interest Rates in America.”