CNNFN: Janet Yellen: Negative U.S. interest rates are possible: Thursday February 11, 2016

by Heather Long @byHeatherLong February 11, 2016: 12:39 PM ET

What the heck is a “negative” interest rate?
What the heck is a “negative” interest rate?

Negative interest rates could be coming to America.

“We’re taking a look at them … I wouldn’t take those off the table,”
Federal Reserve chair Janet Yellen said Thursday at a Congressional
hearing.

Yellen and other experts stress that the U.S. economy would have to get
much worse before the Fed would contemplate such a move.

But if the U.S. does go negative, it wouldn’t be alone. Five central
banks — Denmark, the Eurozone, Sweden, Switzerland and Japan — now
have negative interest rates. In fact, on Thursday, Sweden’s central
bank cut its key rate into even deeper negative territory.

Negative interest rates as monetary policy was viewed as risky and
highly experimental only a few years ago. Now it’s becoming a trend, as
central banks try almost anything to stimulate economic growth.

“It is feasible for the U.S. to do it, but the hurdle is really high,”
says Dan Sichel, a professor at Wellesley College and former Fed
economist.

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