Fed Researcher Proposes Negative Interest Rates for Economic Recovery

Financial analysts are voicing concern after a Federal Reserve researcher says negative interest rates may be needed to save the U.S. economy.

Most economists agree the U.S. is and will slowly recover from the pandemic and shutdown. However, at least one economist at the Saint Louis Federal Reserve has a different take. He wrote the U.S. needs to use aggressive stimulus beyond what authorities did a decade ago during the financial crisis, and that one possibility could include taking overnight interest rates below zero. Financial expert Bill Dendy, President of Elite Financial Management, says that's not necessary.

“I think that for most Americans we believe in this entrepreneurial spirit and ability to make money and our money should be making money. To see where we are paying the bank essentially to hold our funds, we won’t go with that,” Dendy said.

Dendy notes Fed Chairman Jerome Powell has said the U.S. would not use negative interest rates, as they have in Europe and Japan. He says there's no evidence below-zero yields are effective.

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