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Would Negative Rates Work in the U.S.?

APR 14, 2016

The debate over negative interest rates is washing up on U.S. shores.

Monetary-policy makers, bankers and economists are looking to the experience of Europe and Japan and asking whether subzero rates would boost the U.S. economy.

It is a hypothetical question for now; the Federal Reserve has signaled it expects to raise interest rates by a total of half a percentage point this year, not cut them. But with rates just barely above zero, the recovery getting long in the tooth and Fed Chairwoman Janet Yellen saying in February the U.S. central bank was studying the feasibility of using negative rates should it need to give the economy an extra boost, the discussion is hard to avoid.

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