US Fed members unanimously reject negative rates

(Washington) AFP: US central bankers last month dismissed the idea of taking interest rates into negative territory, something President Donald Trump has called for many times, according to meeting minutes released Wednesday.

Evidence for the benefits of negative interest rates -- lenders must pay borrowers rather than the other way around - has proven “mixed” in countries where it has been tried, according to members of the Fed’s rate-setting Federal Open Market Committee.

Federal Reserve policymakers also said at the October 29-30 meeting that the world’s largest economy has “proven resilient” in the face of persistent global difficulties but risks remain “elevated,” including from Trump’s trade war.

But the minutes also confirmed Fed members believe further rate cuts should be unnecessary in the near term, barring major changes to the outlook.

The Fed cut the benchmark lending rate last month for the third time this year, bringing it down to a range of 1.5-1.75 percent. Trump has relentlessly attacked the central bank, demanding lower and even negative interest rates, claiming that relatively higher US interest rates put the country at a disadvantage against weaker economies in Europe and Asia.

During an appearance in New York last week, Trump said the Fed was blocking America from the kinds of stimulus other countries enjoyed.

“Give me some of that money. I want some of that money,” Trump said of negative rates.

“Our Federal Reserve doesn’t let us do it.”

The minutes of the Fed deliberations made clear that under the current circumstances US central bankers have all but shut the door.