Wednesday, December 9, 2015
Stephen Poloz Considers Negative Interest Rates
A 100-year-trend that’s picked up steam in the last 15 years, where central banks have been confident enough to blatantly ignore the supply and demand for loans and keep rates as low as possible.
How low can you go?
For Bank of Canada Governor Stephen Poloz, it’s below zero.
In a four-page pamphlet, the BoC makes its case for negative interest rates because, “the nominal return for holding currency is negative, due to storage, transportation, insurance and other costs associated with securing and storing bank notes, particularly in large quantities. These costs make it possible for nominal interest rates to fall somewhat below zero.”
Poloz makes it sound inevitable.