What the heck is a ‘negative’ interest rate?
Stock markets around the world are in turmoil.
Crashing oil prices and weak economic growth are the main drivers of the market mayhem.
But some experts argue that global central banks are adding fuel to the fire, amplifying the gloomy outlook and spooking investors with unorthodox policies like negative interest rates.
Late last month Japan joined a growing list of central banks putting interest rates in negative territory in an effort to boost growth. Even the Federal Reserve has signaled negative rates could happen in the U.S., if needed.
“Financial markets increasingly view these experimental moves as desperate and consequently damaging to financial and economic stability,” Scott Mather, chief investment officer at PIMCO, wrote in a new report.
Some in Congress believe the Fed has no tools left, leaving its next move up in the air.