Sub-Zero Rates Are No Silver-Bullet

June 2020 – The COVID-19 crisis has already pushed many central banks to cut interest rates close to zero. And with many economies continuing to contract, the concept of negative rates is once again back in the spotlight. Negative rates upturn the normal borrower-lender relationship by imposing interest rate costs on those sitting on cash, encouraging them to spend or invest the money instead. Supporters of negative rates hope they will spark growth and inflation, partly by lowering bond yields and weakening currencies, and give central bankers more room to manoeuvre on quantitative easing. But it has rarely worked out like that. Read further. Compliments HSBC