NY Fed’s McAndrews warns negative rates could drag inflation down
Negative rates may have dramatic unintended consequences
Negative nominal interest rates could create a host of unintended consequences and even push inflation down rather than up, said James McAndrews of the Federal Reserve Bank of New York on May 8.
McAndrews, executive vice-president and director of research at the New York Fed, recognised a number of reasons why rates might be pushed negative, including to exert pressure on real rates, cause a currency to depreciate or to send a strong signal of determination.
But, he warned, the deeper that
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