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2016-05-22

Alarm bells ring over negative interest rates FT

 says Fitch. “In any case, the risk of unintended consequences does appear to be rising as banks, consumers and businesses adapt to a more uncertain economic environment in which negative interest rates are increasingly common.”

Stanley Druckenmiller, the former hedge fund manager said Fed policymakers are “raising the odds of the economic tail risk they are trying to avoid”, such as spurring credit bubbles, by keeping interest rates near historic lows.

Mr Druckenmiller added that the “longest period ever of easy monetary policies” has caused groups to borrow at a quick clip and then use the funds in ways that are not economically productive. For instance, he noted that “most of the debt today has been used for financial engineering”, in the form of stock buybacks and other methods that provide a boon to corporate profits 

MAY 5, 2016


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