The Fed has developed a habit of caving in the face of market pressure in recent years, but we still think the chances of it pushing the fed funds rate into negative territory are low. Fed officials have been united and consistent in arguing that the costs of negative rates are equal or greater than any benefits. More generally, global central banks appear to have cooled on the idea of negative rates. The central banks that had negative rates before the pandemic hit have not pushed their policy rates further below zero, while some Anglo-Saxon central banks have all-but ruled out the possibility.
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