U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that the U.S. central bank would not use negative rates as a tool to stimulate the economy in the future, citing similar decisions during the 2008 financial crisis, Trend reports citing Xinhua.
"Negative interest rates is something that we looked at during the financial crisis and chose not to do," Powell told reporters at a press conference Wednesday afternoon.
"After we got to the effective lower bound, we chose to do a lot of aggressive forward guidance and also large scale asset purchases and those were the two unconventional monetary policy tools we used extensively," Powell said, noting that such tools worked "fairly well."
"I don't think we'd be looking at using negative rates. I just don't think those will be top of our list," said the U.S. central bank chief.
Powell's remarks, however, contrasted with some other central bankers such as the European Central Bank (ECB) President Mario Draghi, who had described the ECB's recent easing measures, including negative rates, as "powerful" not only in the short term but also in the long run.
World Bank President David Malpass on Tuesday expressed his concern about low-yielding bonds and "frozen capital," noting that over 15 trillion U.S. dollars of bonds have zero or negative yields. "The implication is that growth, especially in developing countries, will remain low, as current capital stocks deteriorate and are exhausted," Malpass said.
The U.S. Fed on Wednesday lowered interest rates by 25 basis points amid growing risks and uncertainties stemming from trade tensions and a global economic slowdown, following a rate cut in July that was its first in more than a decade.